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.

In terms of completed transactions, 2009 was the worst on record since the mid 1990s. In addition to an unusually high number of listings, distress sales were the only game in town as five bed and breakfast/inn properties (with four units or more) conveyed in 2009 either as a bank-owned REO property, by a stakeholder opting for quick sale at a liquidation price, or by foreclosure deed.

Making matters worse, not one B&B/inn transaction transpired in 2009 which was not shrouded by some form of distress. The significance of this occurrence is amplified by the fact that as recent as 2005, nineteen B&B/inn transactions were concluded with only one sale of a distress nature. As the number of conveyances continued to trend downward for the next three years, in 2009 the B&B/inn market clearly showed little hospitality. When viewed from a broader horizon since 1995, 2009 proved to be not only clinically anemic but a true market rarity.

Year-to-date transaction figures, however, show 2010 has been much more welcoming. As someone who also follows Cape Cod’s B&B/inn market marketplace closely, few can appreciate the developing trend better than Carol Edmondson. Since 2003 Carol has been specializing in B&B and Inn sales. She and her husband Tom own South Dennis-based Cape Cod Village Realty, a boutique real estate brokerage specializing in B&Bs and inns. In addition to their brokerage activities where they have handled over 15 transactions, The Edmondson’s previously owned and operated a historic 12-room inn in Brewster, MA, selling it in 2003.

According to Edmondson, the clear uptick in B&B/inn transactions is an overdue and extremely welcome event. “We are on track to have our best year ever and that’s a good thing for everyone,” she said.

As for the recent increase in transactions, which Edmondson says primarily involve B&B/inn properties listed for sale in 2008 and 2009, for buyers the time to act is now.

“As buyers sat back, listened to the media, and waited for price levels to bottom out, a certain level of pent up demand developed. What we are seeing this year is that pent up demand being brought to the marketplace and solid deals are getting done.”

Sold In May 2010 - The former Moses Nickerson House, Chatham, MA

Regarding the types of B&B/inn buyers making it to the closing table Edmondson had this to share.

“The buyers I have been working with in the past year have mainly been individuals working in the corporate sector. And many with successful careers. But as we have seen in past market cycles, for the most part these buyers are attracted to B&B/inn ownership as a way of opting out of corporate life and placing their careers and finances in their own hands.”

In her experience both as an owner and broker, for many owning a B&B/inn is a good way to achieve that goal. The seasoned B&B/inn broker added that consistent with past cycles and given the current dour employment picture, the number of out of work and under employed buyers seeking assistance will likely increase, especially as market conditions become more favorable.

Notwithstanding the increased level of B&B/inn transactions, in the current market where the rules have changed and nothing is the same, completing transactions has gotten much tougher. The most challenging hurdle is the length of time required to complete a transaction. The significantly higher level of scrutiny and information required by commercial lenders is seen as the leading factor for the time lag.

“Today’s commercial lending environment is very different from what it was in 2007 and 2008,” said Edmondson. “By and large, banks are taking less risk than ever. Often that means requiring equity contributions of 25-30%.”

She advises all parties she works with that a 60 to 90 day end to end transaction period is increasingly more the exception than the norm as banking regulations and SBA rules become more complex and strict.

To be sure, the current deal environment is not limited to the Cape Cod marketplace. Through her longstanding affiliation with the Professional Association of Innkeepers International (PAII) since 1990, where she currently serves on the Advisory Board, Mrs. Edmondson can attest that the same scenario is playing out across the nation.

In light of this new paradigm, B&B/inn buyers and sellers should be well prepared to successfully navigate through the process. For B&B/inn buyers, this eight-year inn broker suggests being sufficiently capitalized in terms of down payment and working capital. Having a legal, financial and brokerage team knowledgeable of the process to support the transaction every step of the way, is an equally critical element.

For would be B&B/inn Seller’s still reeling from 2009, Edmondson also offers this expert advice:

• Prepare yourself for a longer than expected closing date.
• Be sure to have all property, financial and operating documents up to date, readily available, and in a professional business-like form.
• In the current lending environment, strongly consider offering qualified buyers some level of owner-financing.
• Understand that quite often today’s B&B/inn buyers are savvy business people, educated on the process and are considering opportunities in more than one State or region. Competition for ready, willing and able buyers is high.
• If you want top dollar be sure that all deferred property maintenance is addressed and that your property is staged to show its value.

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Nantucket, MA- A two-story commercial property located at 35 Center Street sold in February 2010 for $1.4 million to Center of Town LLC. The 1,800 square foot structure on a .04 acre lot offers retail space on the ground level and offices on upper level. The wood frame building was built in the late 1800′s and is located in the Nantucket Core Business District, just two blocks north of Main Street. The property was listed for sale and sold by local broker Killen Real Estate.

WOODS HOLE – In mid December 2009, public service broadcaster WGBH purchased the historic Davis House at 3 Water Street in Woods Hole from fellow nonprofit the Children’s School of Science. The move will enable WCAI to continue its radio operations here, and give new life to the 164-year-old building. The recorded deed indicated a purchase price of $670,000. 

“We’re delighted that this wonderful space we’ve rented for eleven years will now become our permanent home,” said WCAI Station Director and WGBH Radio General Manager John Voci.

Since 1998, WGBH has leased the building for WCAI, the Cape and Islands NPR Station, and its repeater services WNAN and WZAI. All are listener-supported public radio stations serving Cape Cod, Nantucket, Martha’s Vineyard, and the south coast.

The exterior of the Greek Revival structure is in poor condition and in need of substantial repairs. In January WCAI will launch an appeal for public support for a Renovation Fund to help restore the building. Immediate needs include a new roof and windows, and the removal of asbestos siding.

“With WGBH’s involvement and the help of our listeners, WCAI will preserve and protect this prominent town landmark for future generations of Woods Hole residents and visitors,” said Voci.

According to Susan Witzell, Archivist and Assistant Curator of the Woods Hole Museum, The Davis House was built in 1845 for Civil War veteran Captain Thomas G. Davis. At one time the house had a store on the first floor with living quarters above, she said. “It was beautiful.”

“The Davis House sits at the gateway of Woods Hole and helps define the historic character of our village,” said longtime resident Thomas J. Hynes, Jr. “Many of us were concerned that the building might be purchased for its location and then demolished to make way for new construction. We are delighted that the property will remain with our friends at WCAI, who have proven to be good neighbors. I know they will be careful stewards of this classic landmark.” 

WCAI, the Cape and Islands NPR station, is broadcast on 90.1FM, 91.1FM and 94.3FM and WGBH HD3, 89.7 Boston. The station is listener-supported public radio serving Cape Cod, Nantucket, Martha’s Vineyard, and the Southcoast.

WGBH Boston is America’s preeminent public broadcaster, producing such award-winning PBS series as Masterpiece, Antiques Roadshow, Frontline, Nova, American Experience, Arthur, Curious George, and more than a dozen other prime-time, lifestyle, and children’s series and websites.

WGBH Radio serves listeners from Cape Cod to New Hampshire with 89.7 WGBH, Boston’s NPR® Station for News and Culture; 99.5 All Classical; WCAI for Cape Cod and the Islands; WNCK on Nantucket; and the All-Classical WGBH HD channel.

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.

The Falmouth facility, formerly operated under the Uncle Bob’s brand, is located between East Falmouth Highway and Village Common Drive. The property has 79,495 rentable square feet in five two-story buildings. Among the 749 individual storage units, 30,000 square feet comprises climate-controlled space. The facility was originally built as Burlington Self-Storage in 1997 and expanded in 2001.

According to filings at the Barnstable County Registry of Deeds, the property was acquired from Sovran Acquisition LP for $4.6 million. Sovran, a REIT which owns and/or operates over 350 self storage facilities in 24 US States under the trade name Uncle Bob’s Self Storage®, previously acquired the property in 2005 for an indicated purchase price of $7.2 million.

According to David Levenfeld, co-founder and CEO of StorageOp, there were some mitigating circumstances which accounted for the price difference. “The Falmouth facility is a relatively large one and perhaps the occupancy projections adopted in 2005 were aggressive. And like all commercial property sectors, the self-storage sector has taken its share of nicks,” he said.

In addition to rebranding the property to Storage Pros Self Storage, future plans for the Class A Falmouth facility include offering larger spaces of up to 1,000 square feet for local businesses and becoming more involved with the local business community.

The Fairhaven facility contains 41,500 square feet of rentable area in six single-story buildings containing 337 storage units and 24 outdoor parking spaces for rent. The property was also formerly part of the Sovran portfolio and has been rebranded to Storage Pros Self Storage. The new ownership will update the Fairhaven property and convert 6,100 rentable square feet of existing space into climate-controlled space. Budget Truck Rental will also be added.

The recent acquisitions brings StorageOp’s holdings to 13 properties collectively offering 780,000 rentable square feet, 6,800 units and more than 950 outdoor parking spaces for rent in its initial target markets of New England and southeastern Michigan. All 13 properties were acquired within the last 28 months.

The properties will be operated by Storage Pros Management LLC, a wholly owned subsidiary of StorageOp, which also offers third-party self storage property management services.

David Levenfeld, co-founder and CEO of StorageOp, commented, “Once again, our strong investor base and solid financing relationships have allowed us to further implement our acquisitions strategy in New England at a time when the capital markets continue to pose enormous challenges. We intend to continue our disciplined growth strategy within our core markets.”

Edgartown, MA- While most market areas are currently experiencing contraction and increasing distress, commercial property fundamentals in the small Down Island business district in Edgartown on Martha’s Vineyard, MA appear to be as favorable as the refreshing summer winds from nearby Edgartown Harbor.

The sale of three retail condominium units acquired in early June 2009 provides some sense of the prevailing winds. 

The three units are located at 4 & 8 Main Street within the Harborside Inn Condominium. The condominium is located on (Lower) Main Street, between North Water and Dock Streets and next to The Boathouse, a recently completed 10,000 square foot private club at the site of the former Navigator Restaurant. 

The location is the busy hub of the established Edgartown business district, an area which generates consistent pedestrian traffic along the brick paved sidewalks uniformly connecting the many mostly seasonal specialty shops and eateries. In addition to a designated Historic District, much of the neighborhood is within Edgartown’s B-1; Business 1 zoning district.

The ground floor commercial units known as Stores A, B & C feature generous display windows and range from 702 to 1,508 square feet and total 2,864 square feet. The recent $2.4 million total sale price amounts to approximately $838 per square foot of gross unit area or an average of $800,000 per unit. The purchasers were a local couple with several commercial property holdings in the Edgartown core business district.

At the time of the sale the units were reported to be fully leased to Chappy’s and Island Pursuit, two affiliated mens and womens clothing shops. Island Pursuit was established in 1983 and offers a wide assortment of luxury brands including Bugatchi Uomo, LaCoste, Lilly Pulitzer, Reef, Tommy Bahama, and Vineyard Vines. In addition to four Florida stores, the retailer has stores in Chatham, MA, Newport, RI and Nantucket, MA.

This recent conveyance is one of only a handful of mostly off-market commercial property transactions recorded in Edgartown over the past 18 months. According to several local sources, the low transaction activity is primarily a function of the buy and hold mindset of many local investors resulting in a limited array of available investment opportunities.

View along North Water Street in Edgartown.

Despite rental rates in the general range of $35.00 to $70.00 per square foot for retail space in the prime pedestrian areas, vacancies are minimal especially by late Spring or just before at the start of the peak summer season. Most rental requirements are in the range of 700 to 1,500 square feet of net rentable area. Reflective of both the tight supply and the close network of  local merchants, it is not uncommon for landlords to receive inquires from prospective tenants either before a tenant moves out or when the vacating tenant is literally in the process of moving. Reportedly, new occupancies include a combination of new businesses and existing businesses desiring to trade up to superior space.

The recently renovated two level building has 4,560 square feet of GBA and is sited on a .64 acre lot offering a prominent location with multiple curb cuts and excellent signage.

The May 2009 transfer equated to a price of approximately $166 per square foot of GBA. Coastal Community Capital  arranged the financing through the Bank of Cape Cod .

The year round restaurant was built in the early to mid 1930′s as the first Howard Johnson’s  franchise in the US. In the years that followed and until about 2005 the restaurant was the well known Fog Cutter Restaurant.

File Photo: The former Fog Cutter