January 2011

According to data compiled by John F. Meade, Barnstable County Register of Deeds, 348 deeds  with stated sales values above $50,000 were recorded at the Barnstable Registry of Deeds in January 2011. The stated consideration in the 348 deeds totaled $147,109,151 and the median sale price was $301,500. Mortgages recorded with values above $50,000 in January 2011 totaled 1,552 and represented $430,515,068 of total placements.  The median mortgage amount for all property types was $215,317.

In January 2010, 343 deeds were recorded at the Barnstable Registry of Deeds (with stated sales values above $50,000) and totaled $131,457,159 in county-wide real estate sales. Based on the same criteria, the median sale price of property in Barnstable County in January 2010 was $294,000. A total of 1,097 mortgages in excess of $50,000 were recorded in January 2010. The aggregate mortgage value was $347,207,485 and the median mortgage for all property types was $235,000.

As depicted in the following charts, commercial real estate transaction volume in Barnstable County, MA  increased modestly in 2010 with arms-length transactions outpacing the 2009 level.

In 2009 and 2010 in particular, conveyances involving distressed commercial properties of all forms continued on an upward trend. In 2010, nearly 27% of all transactions were distress conveyances involving commercial real estate assets in virtually every sector and Cape Cod sub region.

Note: Not all properties are conveyed to third parties through the auction process, a factor which has become more apparent in recent quarters.  Typically auctioned properties which are ultimately acquired by the mortgagee such as a bank, private lender or other lien holder at auction are held until they are eventually re-conveyed out of a REO portfolio or privately. A similar scenario may result in the case of a deed in lieu of foreclosure. Consequently, in calculating the transaction volume which is generally based on recorded conveyances, in some cases the data may reflect more than one conveyance for the same asset due the changing status.

According to the Environmental Notification Form (ENF) filed in July 2010 as part of a required MEPA filing, the proposed Wal-Mart development includes approximately 176,500 square feet total building area. The southern portion of the property is slated to include a single, one story building comprising a 158,000 square foot General Retail and Grocery Store (Wal-Mart).

A four acre out parcel is reserved for future development in the northern portion of the site. The out parcel is conceptually planned for a total of 18,500 square feet of space to be alocated among four buildings and include automotive retail, restaurant, retail, and bank uses.

As proposed, the development will be accessible from Tobey Road and offer approximately 766 parking spaces. The project cost is indicated to be $20 million with an estimated completion date in October 2012.

As part of this retail proposal, Wal-Mart is expected to vacate its existing building in East Wareham. This element has heightened concern over the increasing level of retail flight and the future viability of the East Wareham business district. Recently Staples, Payless and TJ Maxx vacated stores formerly in East Wareham and relocated to Wareham Crossing in West Wareham. A CVS, Stop & Shop Supermarket, and The Home Depot are currently the major retailers in the East Wareham business district. The shuttered 20,300 square foot former Staples in East Wareham is currently offered for lease.

Wareham Crossing is a 675,000 square foot open-air shopping destination offers over 35 stores and restaurants. The modern retail center opened in 2007 and is home to leading retailers including, Target, Lowe’s, L.L.Bean Outlet, Best Buy, Borders, Staples, Old Navy, and Yankee Candle, and LongHorn Steakhouse and Red Robin restaurants.

Correspendence indicated that the Applicant decided not to proceed with the project at this time after evaluating the proposal in light of Cape Cod Commission requirements, the estimated length of review process, and uncertainty regarding both the review and potential mitigation.

As previously reported, the proposal included the construction of a 10-pump facility with five gas islands covered with a canopy. In addition to a 60 square foot kiosk, (1) 10,000 gallon and (1) 30,000 gallon underground storage tanks were also specified.

Reportedly, the Boston office of Eastdil Secured LLC, a wholly owned subsidiary of Wells Fargo Bank has been retained to market the New England Portfolio. Based on the published reports, the firms directly involved have declined comment and offering details are unclear.

However, according to a source close to the mega offering who was contacted in connection with this report, only a partial interest in the portfolio held by an unidentified joint venture partner, is what is actually being marketed at this time.

The 725,000 square foot Cape Cod Mall is one of fourteen mall properties which were jointly acquired in 1999 by Simon Property Group, Inc., JP Morgan Investment Management’s Strategic  Property Fund and TIAA from New England Development Co. in two transaction phases. In the first, the Cape Cod Mall (which was undergoing a major expansion) and nine additional mall properties were acquired. A short time later, the investment group purchased four more malls from New England Development Co..

In the blockbuster $1.7 billion deal, the fourteen malls collectively known as the New England Portfolio totaled 10.6 million square feet. The portfolio includes ten properties in Massachusetts, two in New Hampshire and one in each Connecticut and Virginia.

FALMOUTH, MA - In January 2010, seemingly without much public notice and information after the fact, Harbor Chevrolet at 171 Worcester Court cleared its lots, posted closed signs on the showroom windows, and locked the doors. According to GM and local sources, the long-time Upper Cape dealership is no longer in the dealer network. A redirect to GM from the dealership’s web address confirms the business closure. An affiliated enterprise, Seaside Auto Body was also closed along with the dealership.

Prior to the Harbor Chevrolet closing, Falmouth Ford on Dillingham Avenue was shuttered in 2007. This most recent closing, however, makes the nearby O’Hara Jeep Dodge Chrysler the only new car dealership still operating in Falmouth, MA.  

Few are more aware of this fact than Rich Duffy. He’s an ASE Certified Technician and founder-owner of Falmouth Motor Car, a growing business with state-of-the-art automotive service centers located in Falmouth and Cataumet, and a recently added modern quick oil change facility on Route 28 in West Yarmouth, MA.

“At the time I started in business in the early 1980′s, there were seven new automobile dealerships located in Falmouth. Today there’s just one remaining,” Mr. Duffy noted. “It all shows how much this industry has changed and will likely continue to change, especially for the consumer.” Going forward, Falmouth Motor Car’s mission is clear: make that change a reliable and high quality experience for local consumers who are now left with fewer comparable service and repair options.  

Harbor Chevrolet has deep roots in Falmouth and has served generations of loyal GM customers as either Clauson Chevrolet Oldsmobile and Tom Flurkey Chevrolet Oldsmobile GEO.

Originally occupying the premises under a lease, Flurkey eventually acquired the property under a foreclosure deed from Plymouth Savings Bank in 1994. A decade later, the current owners A&B Brown Real Estate LLC bought the property from the Flurkey’s and continued operating the GM dealership. The 2004 sale included the properties located at 171 Worcester Court (1.364 acre lot with a 10,440+/- SF dealership facility) and the adjacent property at 179 Worcester Court consisting of Seaside Auto Body (.586 acre lot with a 5,000+/- SF automotive facility). The recorded deed filed in June 2004 indicated a purchase price of $1,750,000 for both properties.

A recap of the seven dealerships operating Falmouth in the early 1980′s:

1. Falmouth Toyota- East Falmouth Hwy., near St Anthony’s Church. In the late 1980′s, Tom Murphy relocated Falmouth Toyota to a newly built facility on MacArthur Blvd. in Bourne. The former site was later redeveloped with a car wash.

2. Clauson Chevrolet Oldsmobile – Worcester Court; previously at 662 Main Street.

3. Falmouth Ford – dealership closed in 2007 and the property was sold in 2008. Click for related story.

4. VW/Mazda – currently O’Hara Jeep Dodge Chrysler at 50 Spring Bars Road.

5. Battles Buick- formerly on Depot St.;  the main Battles dealership was relocated to the former Bridge VW facility on MacArthur Blvd. in Bourne.

6. Falmouth Nissan - currently the Cape & Islands Tire store at 735 Teaticket Hwy., East Falmouth, MA

7. Falmouth Dodge – 662 Main Street; in about 2003 the site was redeveloped with a two story brick bank (currently Mutual Bank; previously Security Federal Savings Bank.)

Nestled in the extreme southwest portion of Barnstable County, MA within the Town of Falmouth, the village of Woods Hole is argueably the most diverse, enduring and unique of all the many business districts located on Cape Cod. Just ask anyone with a connection to Woods Hole and they will proudly tell you that’s just the way it is and how they have liked it for decades.

In such a small, densely improved and hard to access village the level of local, regional and international economic activity transpiring behind the scenes here is literally astonishing. 

In Woods Hole, the dominant economic driver for over a century has been the two world renowned educational and research centers, Marine Biological Laboratory (MBL; established in 1888) and Woods Hole Oceanographic Institution (WHOI, established in 1930). Over the years complimentary organizations such a The Sea Education Association and the highly recognized Woods Hole Research Center have been major enhancements to the Woods Hole community.

Business sectors such as tourism, year round and seasonal residency, eating and drinking establishments, creative arts, fishing, marine trades, and retail trade all meld together and add to the flavor and economic vitality of this small business cluster. The highly active Steamship Authority Terminal, WHOI Exhibit Center, U.S. Coast Guard base, and the popular National Marine Fisheries aquarium all add to the seasonal bustle. It is important to note too that all of this activity is happening in the presence of ongoing freight, auto and passenger ferry traffic and a small drawbridge separating the Woods Hole business district at its center! It’s no wonder these factors make bicycles and walking the preferred modes of transportation in Woods Hole.

Among residents, business owners and those working here, community pride and a clear sense of place  is prevalent. In any given day, it is not uncommon to stroll the streets of Woods Hole and hear visiting scientists, researchers, and interns conversing in a range of foreign languages. Organizations such as the The Woods Hole Community Association (organized in 1919) and Woods Hole Business Association go a long way in strengthening and nurturing the fabric of the community.

Over the years, transition in the business community and commercial real estate sector has been low in Woods Hole. Since many commercial properties are owner-occupied, the rental market is extremely tight. Recently, however, certain developments worth noting have surfaced.

In October 2009,  Martha’s Vineyard Saving Bank made it known it intends to establish a branch at the former Bank of America branch bank at 2 Water Street. The branch was one of four Cape Cod locations the large national bank announced in June 2009 that it would close in following months.

This summer, The Penikese Island School acquired the office building at 565 Woods Hole Road for $850,000. Founded in 1973, The Penikese Island School is a small therapeutic boarding school for teenage boys on Penikese Island located 12 miles southwest of Woods Hole, MA. The two story 2,600 square foot c. 1806 building overlooks Little Harbor and has on-site parking. The school previously occupied the building as a tenant for many years and will continue to house their administrative offices at this location. The acquisition was financed by Eastern Bank with a loan guarantee from MassDevelopment.

In November 2008, the Cape Cod Commission approved as a Limited DRI, Wise Living at Woods Hole, 43-unit independent senior living facility at the Nautilus Motor Inn located at 533 Woods Hole Road. The project proposes the demolition of the existing 54-unit Nautilus Motor Inn and removal of the existing pool and tennis courts. The design of the proposed two- and three-story buildings will be in a “shingle” style with gambrel roofs and extensive porches and balconies. As part of the redevelopment project, the geodesic dome in the southeastern portion of the 5.41 acre site will be rehabilitated. The dome structure building was designed by R. Buckminster Fuller and built in 1953-1954. For many years the dome structure comprised a 170-seat restaurant (Dome Restaurant), a use which ceased in about 2002.

A total of 145 qualified commercial real estate sales transpired on Cape Cod from January – September 2008. The latest figures amount to a 23.3% decline from the level achieved in the same nine month period in 2007. The 2008 drop is also about 42% below the 12-year average of 250 sales and the lowest period to period total since 1997.

Quarterly figures reveal the deceleration in the number of sales was evenly spread out among each quarter. The quarterly data also shows in both in 2007 and 2008, first quarter activity once again fell below Quarter II sales volume. This is significant in that, except for 2006, at no time since 1997 has the number of sales in Quarter II been lower than the prior Quarter I total.

Excluding the Outer Cape sub region (Provincetown, Truro and Wellefleet) which achieved a small gain, the remaining three Cape Cod sub regions posted moderate decreases in the number of commercial property transactions. The greatest fall off, however, was in the Upper Cape sub region which experienced a sharp 49% decrease in year over year transaction volume, nearly double the countywide percentage decline.

The Mid Cape sub region once again posted the highest number of transactions (63) for the nine month period. According to the data, the Mid Cape sub region has held the top ranking in each consecutive three quarter period since 1997, until being closely edged out by the Upper Cape sub region in 2007 with 72 qualified sales.

Joseph P. Egan is a MA Certified General Real Estate Appraiser with over 25 years of professional valuation experience. Through a specialization in commercial real estate and closely-held businesses, since 1991 he has completed over 600 appraisal, brokerage and consulting assignments concerning all types of commercial real estate assets and going concerns located on Cape Cod, Nantucket, and Plymouth County, MA. Clients served generally include attorneys, banks, corporations, developers, investors, and owners of closely-held and family businesses. Prior to relocating to Cape Cod, Joe worked in the New York Metro Area and throughout CT with leading regional and national appraisal firms such as Cushman & Wakefield. Please contact Joe here.

Note: Qualified sales generally include arms length commercial real estate sales and exclude transactions such as those involving governmental agencies, conveyances among related or affiliated parties, partition or other court ordered sales, and at least for the time being foreclosure sales in most cases (although they are separated tracked). Excluded property types generally include small multi-family dwellings, agricultural properties, multi-unit residential developments, nursing homes, and lodging properties with fewer than four guest units.

HYANNIS, MA – The Wall Street Journal reported today Circuit City Stores, Inc. is considering a plan which will shutter at least 150 stores and result in the loss of thousands of jobs. Reportedly, the nation’s No. 2 electronic retailer has engaged various legal and industry experts as the firm explores alternatives to filing for bankruptcy protection. (WSJ)

Lawrence Yun, NAR chief economist, acknowledges problems on Wall Street are affecting commercial real estate. “Although capital remains available for residential loans, the credit crunch is pronounced in commercial lending,” he said. “Combined with a slowing economy, the lack of credit is curtailing activity in the commercial real estate sectors. As a result, there’s been a slowdown in the net absorption of space, which is leading to higher vacancies and more modest rent growth.”

Patricia Nooney, chair of the Realtors(R) Commercial Alliance Committee, chracterized market conditions as complex. “We’re in an unusual situation where transactions are being curtailed not for lack of demand, but for serious challenges in obtaining financing,” she said.

Locally, the Cape Cod MA commercial real estate market has also experienced a clear drop off in sales transactions, a subject to be covered in my up coming Quarter III 2008 Market Report. Commercial leasing activity on the other hand appears to be the bright spot in the Cape Cod market. 

The NAR forecast analyzes quarterly data in the office, industrial, retail and multifamily markets. The COMMERCIAL REAL ESTATE OUTLOOK is published by the NAR Research Division for the Realtors(R) Commercial Alliance. The RCA includes affiliate organizations such as the CCIM Institute, Institute of Real Estate Management, Realtors(R) Land Institute, Society of Industrial and Office Realtors(R), and Counselors of Real Estate.