Nobody’s Fool: Before it was hot, Terry Beia bet his money on Front Street
Terry Beia and his partners had just sold some assets in their Traverse City-based oil and gas company, Omega Resources. So where to reinvest the gains? It was 1998, with investment choices galore, from a booming stock market to continued strength in the oil fields and natural gas world.
But what about local opportunities, Beia wondered – why not purchase some downtown Traverse City real estate?
Today it sounds like a no-brainer decision. Prices of commercial buildings downtown have skyrocketed in value – most ballooning 300-400% as downtown has boomed.
But back in 1998 – just after the opening of Grand Traverse Mall and before the reopening of the State Theatre – investing in downtown real estate was no sure thing.
“It’s hard to believe now,” Beia said, looking out across a bustling Front Street from his second floor office, “but the outlook for downtown was really in question at that time. Merchants were jumping ship. Stores were closing, vacancy rates were climbing and property values were softening.”
Still, Beia had confidence, and he convinced his partners Max Coon and Ed Haines to begin investing downtown.
“To me it was real simple … our walkable downtown with its proximity to the bay and the cool, eclectic mix of mom and pop shops has always offered a more unique and appealing shopping experience,” he said. “Add in some really great places to eat and drink and you have the makings of a true hot spot.”
So acquisition number one was soon in the books. Beia’s company, Traverse City Development, made its first downtown real estate bet – the purchase of the old Arcade building at 140 East Front St.
Eyebrows were raised. Why would someone think that putting money into a sleepy downtown was a good idea?
“After we bought the Arcade and Subway (currently Harvest) buildings, we became known as the suckers that were investing in Front Street,” Beia recalled. “I started getting calls from other property owners looking to unload.”
And unload they did, with Beia gladly snapping up even more downtown spots. Within the next four to five years, Beia fielded those calls, smiled and kept investing.
It didn’t take long before Traverse City Development and its related entities added almost a dozen more buildings to its roster. The DeYoung Building, built using local brick and Perry Hannah wood by none other than James Munson. The City Center Building and giant parking lot behind it at the prominent corner of Front and Union streets, today home to The Dish Café, Good Harbor Coffee, James C. Smith Jewelers and several upstairs business tenants. The Wilhelm Building at Union and Eighth streets (now home to AT&T and Beia’s own residence upstairs) and the former Hibbard’s Florist (currently Honor Bank) building across the street.
By the early 2000s, confidence and interest downtown was beginning to gather momentum. Traverse City Downtown Development Authority Executive Director Bryan Crough worked to maintain a diverse mix of shops and restaurants, and started incorporating events like the summer Friday Night Live series, bringing more and more people downtown.
Looking back, current Downtown Development District CEO Jean Derenzy said Beia and his fellow downtown investors were visionaries at that time.
“Terry knew that a strong city center was the key to building and developing the city and our region,” she said.
Beia and his partners advanced further yet, taking advantage of still relatively underpriced properties by purchasing more commercial buildings and also some prominent apartment buildings and single family homes with all the right addresses – Union Street, Front Street, Munson Avenue and Fifth Street.
And while keeping the buildings in the portfolio was one thing, maintaining and improving the mostly weathered brick buildings – many a century old – was another. Wood restorers, brick repair crews and carpenters became regulars at the sites as the building owners repaired or even completely restored the historic structures. He also faced the task of filling tens of thousands of square feet of retail and office space with willing tenants. With a reputation among landlords as someone who typically charges below average rental rates, Beia did so intentionally with his eye on the bigger picture.
“I don’t like turnover. You have a tenant leave and then it takes a few months to find a new one. By the time you do, you’ve lost all the gains you’d made,” he said.
In 2007, downtown’s growth became turbo-charged by the reopening of the historic State Theatre on Front Street, and what seemed like overnight, downtown nights and weekends saw thousands of locals and tourists walking the streets, shopping, dining, and watching films on the big screen.
“The transformation didn’t happen overnight,” said Beia, also noting there many of his heroes who helped build downtown and support his vision. He specifically singles out Crough, calling him “super hero number one … Bryan died way too young but he passed doing what he loved … making TC a better place to live, work and play.”
He also credits attorney and fellow Downtown Development Association (DDA) board member Chuck Judson, who “was always the smartest guy in any room.”
And lastly he gives a nod to Bruce Rogers, another downtown property owner, whom Beia called “Mr. Traverse City himself” who taught him “it is always better to be kind than it is to be right.”
Then came the 2008-09 crumbling of the economy. The Big Three automotive manufacturers wobbled, companies instituted layoffs – and the real estate market tanked. In Traverse City, the Economic Development Corporation, responsible for leading local investment and attracting new jobs, saw a staggering drop: in 2007, $62.5 million in total investments. One year later, $14 million.
“Listen, I spent a lot of sleepless nights in bed looking up at the ceiling,” recalled Beia. But he didn’t buckle and he didn’t sell.
Today Beia sits reflectively in his office inside the restored DeYoung building – giant oak pocket doors, original wood floors and skylights. But it’s still not easy, he is quick to add.
“There will undoubtedly be economic cycles that impact all property values … hopefully none as deep or extensive as … 2008,” he said. “In my opinion, it’s really not a matter of if but when. The trajectory is never a straight line up.”
But he’s not ready to sell just yet.
“I see our area as being somewhat insulated from big value hits regardless of the length or severity of the eventual pull back. The buzz is driving population growth, which in turn will drive demand. High demand leads to increasing real estate values,” he said.
And the real estate values have certainly increased since that first investment in 1998. Beia’s initial real estate purchases were in the $40-$50 per square foot price range. Today – in the rare instance that a downtown building even changes hands – the prices reach easily $200-$300 per square foot.
But Beia’s world is changing, too. His initial investment partner Max Coon passed away in August and Ed Haines is now retired. But Beia carries on, with many of his investments now solely owned and some paid off free and clear.
In 2018, downtown Traverse City recognized Beia with the Lyle DeYoung Award, noting his “significant contribution to the vitality of downtown Traverse City.”
He in turn credited the downtown merchants, who “show up in February, shovel their walks, turn the lights on in the morning, off at night. Sometimes without registering a sale. That takes dedication.”
Regardless of which way the economy turns next, Beia will continue to search for the next downtown project. A visionary – and definitely no sucker.