Commercial Building Back on Track: Several properties underway, in the pipeline

After a couple years of promise, 2017 looks to be when it all comes together for commercial construction. That’s a far cry from the depths of the recession just a few years ago, when the construction industry all but collapsed, and building anything was nearly folly. Particularly anything commercial.

“I think it’s solid for us,” said Mike Brown of Burdco, looking ahead to the rest of this year. The company specializes in office buildings and medical facilities, among other things. “We’re not fully booked yet, but we’ve got some medical and general office (projects).”

“We’ve looked at a lot of things, deals that aren’t yet done,” continued Brown. “I’m shocked at how many are on the table or in the pipeline.”

Commercial Realtor James Schmuckal is upbeat as well.

“What we see are several properties in the making,” he said, mentioning numerous projects. “A 13,000 square-foot industrial building to be built off Three Mile. A distiller needs 5,000 square feet. Another 6,000 square feet is in the final stage of signing at Hammond Industrial Center, and another on Hammond (that’s) 23,000 square feet.”

Many of those and other projects incorporate numerous tenants, who all have a need for substantial space.

That’s in line with national trends. According to the construction industry site ConstructConnect, retail, warehouse and fulfillment centers are all on the upswing, while private office building construction has been very strong the last couple years. Lodging and amusement project construction is also up. Those trends go hand-in-hand with consumer confidence being high and residential building increasing.

As property and parcels both become scarce in town, attention is shifting to other areas. Chums Corner on U.S. 31 south is one such area. Among the projects on tap there is a 32,000 square-foot distribution center for a major franchise company in Chums Village, where Wuerfel Park and Preston Feather are located.

“It’s not signed yet,” said Schmuckal, who represents numerous properties in that area. “But it’s nearly there.”

Socks Construction of Traverse City has several projects underway, and more on tap. Much of the company’s work is in multi-family condo projects, though the company also does different commercial projects as well.

“There are a lot of things on the horizon,” said John Socks. “The last couple of years have been momentum-building. It’s been a long time coming. There’s a lot of pent-up demand.”

One concern is the labor market. Many of those in the building trades moved away or found other careers when the recession hit. Socks said it’s perhaps more challenging to find subcontractors now than a decade or more ago, but he’s not overly worried. It might be a little difficult to find some skilled laborers, he said, but the fact Socks kept on building throughout the recession has helped.

“Ours (subcontractors) stayed pretty loyal,” he said.

Retrofitting on the Rise

Schmuckal said another facet of commercial construction which looks promising for this year is renovation or, as he calls it, retrofitting.

“Stratus (Stratus Marble & Granite, a stone fabrication and installation business) bought (the building) where Preston Feather was,” he said. ‘They’re renovating to the tune of about $1 million, bringing back to life a vacant building.”

Schmuckal also took note of two downstate firms looking to move to the area. There are no suitable facilities, so he said they are looking to renovate.

“We see it’s light industrial, wholesale, service businesses that are looking for space,” he said. “There’s still a surplus of office space.”

Schmuckal said his goal is to help orchestrate the needs of companies looking to move here or expand, though he, too, acknowledged the challenges of finding enough skilled labor.

“We know it isn’t easy. It (construction or renovation) may take a little longer than 10 years ago.”

New Housing

A new apartment complex proposed for East State Street is the latest in a series of developments slated to bring hundreds of rental units to downtown Traverse City by the end of 2018.

REI Construction is planning to build a five-story development called TC Lofts at 340 East State Street between the Boardman Brownstone Condominiums and law firm Running, Wise & Ford. The “urban loft” complex will feature 39 market-rate rental units – including 28 one-bedroom units, 8 two-bedroom units and 3 live-work units with State Street frontage – incorporating “modern design and high-end finishes,” according to the company.

TC Lofts joins five other projects underway in or around downtown Traverse City shepherded by developers scrambling to meet the area’s housing shortage – particularly in the rental unit category. Combined, the six developments could bring nearly 500 new apartments to the downtown (or downtown-adjacent) district over the next two years.