Looking south
Whatcom County is a first-stop for many travellers crossing into the U.S. from B.C., but it?s also a market ripe for commercial property deals thanks to America?s ongoing economic woes.
While the county is comfortably situated between the Seattle and Vancouver metropolitan areas, the loss of major companies such as Johnson Outdoors Inc. and boat-builder Aluminum Chambered Boatshas dealt a blow to local real estate. Some estimates put the amount of vacant industrial space in the county at 750,000 square feet, well above levels seen prior to the recession that rolled across the U.S. in late 2008.
?Some of the larger blocks of space that we saw come vacant in 2010 and 2009 have been leased or sold. But there still is quite a bit of space available,? said Don Gustafson, principal of Bellingham appraisal firm Gustafson & Associatesand a veteran of the local real estate market. ?It?s very difficult for some of these buildings to sell because the financing is very difficult to get, extremely difficult to get, in our current economic situation. Banks are very skittish.?
Cap rates have increased to 7.75% from 7.25% on industrial property versus approximately 6% north of the border in Metro Vancouver. The most active buyers in the current market are owner-occupiers and investors who can afford to be patient, said Richard Eggemeyer, a commercial property broker with Saratoga Commercial Real Estate Inc. in Bellingham.
?The only people who are financing to buy are owner-occupied properties,? he said. ?It?s very, very hard for banks to finance something that?s not owner-occupied.?
While buyers from Canada are showing the most interest in discounted sun-belt real estate, Eggemeyer said Whatcom offers opportunities, too.
?I think for cross-border investors it?s a good time to secure some U.S.-dollar based assets at a deep discount,? he said.
One industrial owner, former Business in Vancouver reporter Carreen Maloney, recently took the step of adding a $30,000 cash finder?s fee to anyone who connects her with a buyer for the warehouse where she previously operated Fuzzy Town Inc., a plush toy wholesaler.
?The toy industry was hit particularly hard in these tough economic times, so we decided to phase out plush toy inventory,? she said last week.
Fuzzy Town now focuses on initiative advocating for the humane treatment of animals through the Fuzzy Town Rescue Posse and doesn?t need the warehouse.
Built in 2005, the 10,000-square-foot building sits on 1.5 acres in Ferndale, south of Bellingham. Valued at US$1.2 million four years ago it?s currently listed at US$999,000. A quarter of the 20 parties that have viewed the property have been from Canada, so Maloney is now focusing her efforts on finding a buyer here.
The whole truth
A recent item in this space noting the makeover of the Burrard Motor Inn stumbled in describing the ownership of the project, which is in fact a joint venture not only of Kalla Holdings Ltd. but also Primex Investments Ltd. Primex is an investment holding company controlled by the Rennison family and run by siblings Andrew and Lee Rennison. (Kalla, of course, is run by Tony Kalla, who was interviewed for the original item.) Kalla Holdings and Primex are investors in the Burrard through 1100 Burrard Holdings Ltd.
In vino veritas
Speaking of joint ventures, two prominent West Coast wine families – the Stewarts of Westbank and the Zepponis of Napa – have joined forces to launch Plume Winery in Napa. But release of the winery?s first wines is a prelude to the purchase of an actual winery in California for production of Plume?s wines.
West Coast Wine Partners LLC is the entity through which the deal will be done. It?s a joint venture of Dan Zepponi and Bacas Holdings Ltd., a Stewart family investment vehicle.
Tony Stewart, proprietor of Quails? Gate Estate Winery, said he began scouting properties in Napa because of the region?s cachet and recognition among consumers. Zepponi?s experience in the region also makes the fit a good one.
?We?ve got a couple of things on the go, where we?re looking at possibilities,? he said in discussing plans for the purchase, which he hopes will give Plume operating premises of its own in time for the 2012 harvest. ?But we can?t say anything. We?re waiting till we get something signed.? ?
