July 31, 2011

Where The Money Is Being Spent

Readers suggested a topic on trends in construction. “I’d like a thread from readers where the money is being spent/invested in your area. Our public television station just announced they were building a new spread downtown. The state is kicking in $5mm since they are renovating an existing building along w/new construction. Marriott just announced they were taking over some downtown buildings and renovating them w/M&T Bank backing. Our schools are still spending money on windows and grounds improvements. We have two hospitals w/new expansions. We have several new commercial retail building going up in our local villages. One is a center of businesses not just single business center. The money is flowing here from somewhere. And it isn’t just for meds, feds and eds.”

“But when you hear from say Colorado, it seems he’s looking at a totally different reality. I always felt commercial builders/contractors in this area had special ties to Albany and others that make things happen.”

“Is anyone else seeing this much new commercial construction being approved?”

“Maybe Blue Skye was right when he said upstate suffered their bottom in the 90s when everyone else was booming and now we’re on the way up? Not sure that feels right. I still think in the end no area will escape the overall reality when credit freezes up again. Sounds like our leaders are just still spending and lining pockets while it’s flowing.”

A reply, “It’s all public money funneled to private entities through the public/private partnership scams. Look no further than the “Global Foundry” scam in Malta, NY. Taxpayers are on the hook for all this kick the can down the road nonsense. It’s unsustainable.”

One added, “Here in metro Denver the new light-rail line connecting downtown Denver to the Jefferson County municipal complex is nearing completion. The line to the airport is scheduled to open in 2018.”

“The new IKEA opened on Wednesday to much hoo-ha. This is in an area already nearly built-out with retail and commercial office space, near I-25 and C-470. Throughout much of the metro, strip retail is peppered with vacancies.”

Another said, “The widening of I-75 from Cincinnati to Dayton recently started up the next phase (another 6 miles), the rebuild and expansion of the highest bridge in Ohio (on I-71 just north of Cincy) just started and should take a few years. New smaller commercial stores (tire stores, auto dealers, chain restaurants) continue to open up here. Casinos in Ohio’s biggest cities are about ready to break ground following the lifting of ban on such establishments. Cincinnati has a huge project under construction along the river, but it seems to get stalled for political reasons a lot.”

“Expansion in the Cincy/Dayton corridor has slowed from its torrid pace a few years ago, but road projects, commercial buildings, and houses are still going up.”

One observed, “On my stomping grounds, an old warehouse-thing was empty for about 10 years. A local said it had been a sort roller-rink for kids. After a year of renovations, it opened as an Asian supermarket last month.”

“An old Italian restaurant was half-torn down and renovated into a high-end pizza bistro. A store for kids bedrooms just opened next to the futon store. A 1-800 mattress store expanded from a strip mall into its own building. A one-story business building used to hold a Wachovia and a small piano store. When Wells Fargo bought Wachovia, they kicked out the piano store and are expanding into the space. After a little renovation they’ll turn rip down the Wachovia sign and raise the Wells Fargo flag. An old car dealership sat vacant for 5-6 years. There are signs out front that they are hiring and making it into a dealership for Mini.”

‘An old standalone Anthropologie store went down 5 years ago. The local Marlo furniture has a huge store, but they are moving the “tile kitchen bath” portion to the old Anthopologie. A cramped Whole Foods (used to be the old-school granola version) was in a high-end strip shopping center for decades, it seems. They finally moved down the road to larger and more yuppity digs. The old space was snapped up and is being renovated into a Fresh Market, which is almost the same thing.”

This is all private sector.

The Post & Courier. “In a break from the rest of the real estate industry, the apartment business in Charleston is busting out of the doldrums. Not all of the projects will spring from the ground anytime soon, but experts said the most financially feasible deals are likely to get done over the next two to four years. ‘The difference between now and five years ago is that the lenders are really going to control how much is developed,’ said Don Evans of Evans Rivers & Co., a Charleston-based real estate investment advisory firm. ‘It’s going to be lot more conservative.’”

The News Journal. “A vacant 505-acre tract here that had been approved for a large mixed-use, master planned community behind the planned Walmart Supercenter on Old Kings Road is now headed for the foreclosure auction block.”

“It’s a sign of the times, said Don Tobin, owner of GoToby.com Realty in Palm Coast. ‘There were a lot of developers that had big plans five years ago and did not make it,’ he said. ‘This was going to be pretty significant development with lots of homes, shopping centers, a school and fire station.’”

“Officials with JX Properties declined to comment on the loss of the property, which the Flagler County Property Appraiser says has a taxable value of about $2.8 million. The only work done on site was a narrow trail cut into the property’s northwest corner off Old Kings Road for some preliminary engineering work.”

From Financially Fit. “Here’s the dirty little secret about home renovations: Most of them don’t pay off. According to Remodeling Magazine’s annual survey, only steel entry-door replacements can be counted on to boost home value enough to recoup 100 percent of costs.”

“Homeowners can get a lot of value out of renovations before they even put the home on the market. “If you have a dated kitchen or the stove doesn’t work, you can invest money now to glean some enjoyment as well as make the home more appealing when you sell it,” says Kit Hale, general manager of MKB Realtors in Roanoke, Va.”

“That’s what Erin Schaff and her boyfriend did when they decided to upgrade their two-bedroom condo in Victoria, Canada, several years ago. ‘It wasn’t in horrible shape, but we wanted to upgrade,” she says, so they spent about $10,000 replacing the baseboards, window trim, and floors. They also remodeled the bathrooms and upgraded the hardware. In addition, they put new cabinets, appliances, and granite countertops in the kitchen.”

“Schaff and her boyfriend enjoyed all those upgrades before deciding to sell their home earlier this year. She believes the renovations paid off, too. ‘Had we not renovated, we probably would have lost money as we had purchased the condo at the peak of the real estate boom. Instead, we turned a profit and covered most of the costs of purchasing the house we now live in,’ she says.”

From Vail Daily. “Mike Dantas had a big decision to make as the local real estate market started crumbling a couple of years ago: either keep making payments on vacant land or build something. For Dantas, co-owner of Dantas Building Co., the decision was fairly simple — build. ‘We’re builders — that’s what we do,’ he said.”

“But more specifically, Dantas and his brother, Dave, are in the business of building ’spec’ homes — homes built without a specific buyer in mind. What Dantas ended up building in Avon’s Wildwood neighborhood is a foundation and two fairly modest homes. The foundation was sold to another builder — something spec builders don’t usually do. The other two homes will sell for between $550,000 and $649,000. In 2007, those prices would have been much higher.”

“‘We believe we have the right product,’ he said. ‘Right now, our competition is foreclosures, banks sales and duplexes.’”

“Dantas believes he’s taken the right approach with his project in Avon. ‘These days you’re not going to make money on the land, and you’re going to give a lot of the labor away,’ he said. ‘You don’t make a profit like you used to, but we’ve tried to build what the valley doesn’t have right now.’”




Bits Bucket for July 31, 2011

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