"Cautious optimism" is a term commercial realtors, developers and bankers in South Bend and Mishawaka like to use to describe the area's real-estate market. Development activity has been consistent, but most will admit that the climate is a bit uncertain because of factors that affect all commercial real-estate markets.
Local commercial real estate is sensitive to national financing markets that, in turn, are subject to global financing pressures," says Donald Schefmeyer, a commercial mortgage banker and developer with interests in South Bend, Mishawaka,. Elkhart and Indianapolis. "When finance rates are in the 10.5 percent or higher range, it puts a tremendous strain on highly leveraged real-estate projects." Interest rates combined with concerns about recent real-estate tax increases are the major reasons for the air of caution, says Schefmeyer.
Problems in the banking industry nationwide also contribute to local cautiousness. Banks are becoming more restrictive in underwriting. "It's much more difficult for a developer to build today than in the past 24 months," says Chris Davey of Cressy and Everett Commercial Company, Inc., a major developer in the South Bend-Mishawaka area. "Overbuilding in hot spots like Houston, Dallas and Denver is responsible for the conservative stance of most bankers today." According to Davey, Indiana's supply 0 commercial space is more in synch with the demand, compared with other parts of the country. For that reason, growth has been stable, though not dramatic.
Mishawaka's Grape Road corridor continues to be at the hub of retail and commercial growth. Cressy and Everett's energetic Edison Lakes Corporate Park is the primary center of new construction. The 700acre, multiuse development east of Grape Road is moving forward with multistory office buildings, smaller 6,000-square-foot office buildings for individual purchase and an attractive "flex space" complex with equal amounts of office and distribution space.
Schefmeyer and Hall recently opened the Park View Atrium, a luxury office building in South Bend's growing East Bank district downtown. It joins two other new office complexes in the area that were developed by Holladay Corporation.
Holladay Corporation has been a leader in renovation and new construction of off ice space in South Bend and Mishawaka. "Interest in the downtown area continues to be strong," says Patt Crowley of Holladay. Project Future, the local economic development agency, backs that up. The occupancy rate for downtown office space, according to Project Future, is 91 percent.
The city of South Bend has started developing an urban industrial park that includes a large chunk of the old Studebaker manufacturing complex. The $4.9 million project will require the acquisition and demolition of numerous vacant buildings to make way for an industrial park. The project will encourage developers such as Holladay Corporation to construct flex-space office and light industrial facilities nearby. A similar project in the Monroe Park redevelopment area has been a major success.
Development activity is taking off northwest of the city in an area anchored by Michiana Regional Airport. A long-range "Project 2010" plan was unveiled recently by South Bend officials. "Once the infrastructure is in place, this large tract will be ideal for continued industrial expansion in our area," notes Holladay's Crowley. Holladay Corporation is a major player in developing existing industrial park land near the airport. "We're also looking to bring much-needed office space, too," Crowley adds.
Access to transportation is the primary stimulus for development of the far-northwest side. The nearby airport, U.S. 31 expressway and Interstate 8090 are major draws. Indeed, transportation is key to the entire South BendMishawaka area. Economic developers continue to tout the handy location-convenient to major commercial centers such as Chicago, Detroit and Indianapolis.
Commercial real-estate activity in South Bend and Mishawaka is widespread and steady. The optimism, though cautious, is well-founded in past performance. "South Bend and Mishawaka are poised for a great decade of expansion and increasing property values," concludes Schefmeyer. "The advantages of the area are becoming more widely known. And convenient transportation simply adds one more aspect to the quality of life here."
- Gary Pethe
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|Title Annotation:||Real Estate Around the State|
|Publication:||Indiana Business Magazine|
|Date:||Sep 1, 1990|
|Previous Article:||Northwest Indiana.|
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