Shakeups In Downtown Real Estate
By Beth Milligan | Jan. 16, 2020
The closure of Front Street’s Horizon Books isn’t the only major real estate change coming to downtown Traverse City this year. Several other high-profile properties are hitting the market, offering the opportunity for new investment and possible shifts at well-known downtown locales.
Two such properties are both on Front Street along with Horizon Books – each a historic building dating back a century or more. At 109 East Front Street, owner and developer Thom Darga listed part of the Hannah Lay Building for sale this week. Darga purchased the building from Chemical Bank in 2019. Listing firm Three West calls the sale a “rare investment opportunity” to purchase nearly 30,000 square feet – the entire first and second floors of the 1900-era building– for $8.7 million. The price tag reflects several factors, according to realtor Scott Hardy, including the fact both floors are already fully leased, with Boyne Country Sports occupying the ground floor and commercial offices occupying the second.
“It’s been completely rehabbed: all new mechanicals, electrical, the bones of the building have been completely redone,” says Hardy. “(The listing price) also reflects the fact it cash-flows at a fair-market rent, triple net.”
According to Hardy, Darga is still planning to develop residential condominiums on the third floor of the building. “He’s looking to find potentially an investor who might want to come in and accrue the benefit of those leases (on the lower floors),” says Hardy. The third-floor condos – planned to feature balconies overlooking the Boardman River and access to underground parking – would be developed for sale to individual unit owners.
A similar opportunity to own a mixed-use historic building with a retail tenant included has opened up one block east on Front Street. The former Martinek’s building went up for sale this week for $1.385 million, a figure that includes 2,560 square feet of building space and the iconic Martinek’s clock on the sidewalk in front of the property. According to the Coldwell Banker Schmidt listing, first-floor retail tenant Robert Frost wants to continue on as a long-term tenant, an arrangement that would yield $2,900 per month triple net for the new building owner. The first floor was completely gutted and renovated in 2013, according to the listing; the building itself dates back to 1922.
The sale also includes an upstairs residential condominium with views of the Boardman River and West Grand Traverse Bay. The listing notes the building is “zoned commercial, so nightly rental opportunities are an option.” While the City of Traverse City is considering banning short-term rentals in some commercial districts, such units are still allowed in the downtown Traverse City core under the proposed ordinance change.
Around the corner in the Warehouse District, owner Patti Mercer put three high-profile properties along Grandview Parkway up for auction this week. The vacant parcels – located at 207, 211, and 221 Grandview Parkway next to the Hotel Indigo – were originally the site of a planned $41 million development called Grandview Place. Project plans called for a sprawling four-story building featuring a multi-vendor market, restaurants, retail boutiques, a coffee shop, community gathering spaces, underground parking, and 51 condominiums. In spring 2019, Mercer told The Ticker she was scaling back those plans and hoped to sell two of the parcels and develop the third, or else find an investor to partner on developing all three sites. Mercer still hoped to bring a market and luxury condos to the site.
But Mercer says she couldn’t secure the necessary investment to proceed with developing the property and decided instead to sell all three parcels. The property was put up for auction online Tuesday and Wednesday this week, with a minimum starting bid of $1.9 million. At the end of day Wednesday, the high bid for the property was $4.7 million – a figure that fell short of the reserve price (Mercer declined to identify the reserve). Despite the unsuccessful auction, however, Mercer believes she’ll have a buyer for the property shortly.
“In the last couple days, I've had several parties contact me to let me know they wouldn't be participating in the auction, but would like to discuss a private deal,” she says. “I expect we'll reach a deal with one of them by the end of the week.”
Several changes could also be coming to the downtown restaurant scene. Kevin Endres of Three West says he has secured two letters of intent for the ground floor of the new four-story building under construction at the corner of West Front and Pine streets. The site, which is being developed by Erik Falconer and Joe Sarafa, is the future home of a 4Front Credit Union administrative center. Endres says two other tenants are also now lined up for the building, including a restaurant and a medical-related business. The realtor declined to identify the tenants, citing deals that are still being finalized, but says they will collectively occupy nearly 7,000 square feet on the ground floor.
Finally, three other restaurant spaces are also up for grabs downtown. Ram’s at 127 Union Street, which was listed for sale in November for $800,000, has now dropped to $99,999. The listing includes the business, bar and kitchen equipment, and use of a tavern license. Thirsty Fish Sports Grille was also recently listed at 221 East State Street for $349,000, including the restaurant business, liquor license, fixtures, and equipment. And at 531 West Front Street, Georgina’s owner Anthony Craig has listed his former Bushi restaurant space for rent. The lease is $4,500 per month for 1,176 square feet – including a courtyard that can accommodate outdoor seating – with an option to include a Class C liquor license at an additional monthly rate.
Pictured: Hannah Lay BuildingComment