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Old 02-01-2010, 08:12 AM
 
Location: Kingsport, TN
1,697 posts, read 6,483,656 times
Reputation: 1776

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It was a sure-fire real estate winner in 2007: 8.6 acres of real estate at the southeast corner of West Market Street and State of Franklin Road, a stone’s throw from Johnson City Medical Center, that prompted a tug-of-war for its control and use.

Today, the property that prompted such wrangling sits vacant save for a sizeable “for lease” sign, and the “winner” (at $3.1 million) of the battle to own it, Kingsport businessman Stewart Taylor, has won the right to pay the mortgage without deriving any income for the foreseeable future.

Taylor isn’t alone. The property is merely a testament to the crushing blow the recession has dealt to commercial real estate.

JohnsonCityPress.com - Local News - Johnson City, TN
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Old 02-01-2010, 10:19 AM
 
Location: Gray, TN
2,172 posts, read 4,295,297 times
Reputation: 929
Why not carte blanche a large corporation to relocate it's HQ to one of these open locations?
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Old 02-01-2010, 10:37 AM
 
Location: Seattle
7,071 posts, read 15,864,679 times
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Which HQ was that? I'm sure Johnson City would jump at any chance. Their problem is not being proactive. But I'm sure that other municipalities with more resources - Knoxville, locally - have more to offer relocating companies.

This property has a funky, spiteful history. It's probably better to let it lie open for a while to dissipate any weird plans that someone might produce for it, just to get back at someone else. Because, kiddies, that's how this city runs itself!!!
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Old 02-01-2010, 11:49 AM
 
Location: Beautiful East TN!!
7,279 posts, read 20,351,238 times
Reputation: 2777
Quote:
Originally Posted by rccrain View Post
Why not carte blanche a large corporation to relocate it's HQ to one of these open locations?
I believe one of the main reasons is the commercial banking industry. For a developer to entice a company to lease the location they own (raw land in this case.), they have to build to the needs of that company at their own up front costs and wait for the return on the lease payments. The banking industry is just not lending to developers on "speculative" leases. Meaning the company wanting the space signs an "intent to lease" with terms attached, such as how the building/structure is to be built and so forth. Banks will then only lend on 50% of that, sometime less. The developer has to fund the rest out of their own pocket. Then what happens if the company backs out of the lease because they go belly up during the building process (which can take years)? The developer is now stuck with millions of debt and lost working capital. No one, developers or banks, want to put the cash up to get these things done. Everyone assumes everyone is going to go out of business.
The most a city can do is to put in infrastructure in exchange for more sales tax revenue and job creation. For example, there is a large manufacturing plant in Elizabethton that at one point hired 500 or so employees. To get the plant to build there, Elizabethton paid for the road to the plant from the main existing road and forgave the water/sewage bill for 5 years. Win/win for the plant and the city. However the city can not loan out/give out money to any one business. It is in the bi-laws of any city. Separation of government and private sector and all that. The bottom line now is if the money isn't made available to the developers to build the buildings, it doesn't matter what a city offers as incentives to get an HQ to locate here. The developer can't afford to build the building.
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Old 02-01-2010, 12:19 PM
 
Location: Limestone,TN/Bucerias, Mexico
1,452 posts, read 3,040,095 times
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Quote:
Originally Posted by jabogitlu View Post
Which HQ was that? I'm sure Johnson City would jump at any chance. Their problem is not being proactive. But I'm sure that other municipalities with more resources - Knoxville, locally - have more to offer relocating companies.

This property has a funky, spiteful history. It's probably better to let it lie open for a while to dissipate any weird plans that someone might produce for it, just to get back at someone else. Because, kiddies, that's how this city runs itself!!!
Ahhh, you nailed it, jab.. Pro-active! That's the ticket - but why aren't they?? WHAT has the Economic Development group done - does anyone know if *they've* been pro-active? (Certainly not with JC's downtown - although I do know one exception)

Liked the "funky, spiteful history" bit... That is SO true.

Seems like, if the banks won't lend to big developers (as Mouse said) this is a good time for smaller developers, who've managed to retain their resources, to do smallish projects. I personally think it would be so refreshing to trend away from big box stores and do everthing possible to encourage small entrepreneurs to bring businesses into JC.. Certainly with much lower cost incentives, the city could financially handle *that*. But we all know, cities relish snagging those mega corporations - and the BIG tax dollars. The question, though in the long run is; what kind of identity does it give a city to have every single BIG franchise like every other nearby city while sacrificing and stifling its *small* businesses.

I've always maintained that with a little help from city incentives, downtown would be much farther along than it is. Sorry, off the subject a bit - but then again I guess we are talking about commercial real estate.
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Old 02-01-2010, 05:15 PM
 
Location: Seattle
7,071 posts, read 15,864,679 times
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To be honest, Sarah, I'm not sure what they've done. At this point there are so many "boards" and "boards of boards" in Johnson City that I have no idea which one you're referring to. Transparency in government is beyond our current administration (local) - you know, having a true, useful city website with all this stuff would be ... good....

I read the city agenda's minutes but there's nothing in there except building codes, payments (Johnson City has lots of those, I've noticed), and minutiae like street closings.
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Old 02-02-2010, 12:23 AM
 
284 posts, read 721,461 times
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Is that piece of property, the one with the butchered century trees? If so, I imagine it will sit empty for a while. I wasn't even living here when the situation arose, but my family sent me the articles, and it was most unpleasant.
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Old 02-02-2010, 07:40 AM
 
Location: Gray, TN
2,172 posts, read 4,295,297 times
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When will we know when the local commercial real estate has recovered?

I think it would be very telling if Hamilton Place became 90% full. Right now it looks about 30% full. Very telling indeed, because that is a prime spot.
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Old 02-26-2010, 09:19 PM
 
2 posts, read 3,084 times
Reputation: 10
That is so true of the state of commercial property market in the current global turbulent times.
Not only is the value of commercial properties 30-40% lower than the levels seen 2 years ago, the banks have put a brake on commercial loans for development of vacant commercial blocks of land.
These days to get a 80% lvr on commercial loan is extremely difficult.
The only positive is that the rental yields on commercial property are around 7-9% which are attractive for investors with good equity in their commercial properties.
Rob
[mod] deleted [/mod]

Last edited by mbmouse; 02-27-2010 at 06:15 AM.. Reason: links not allowed from new posters to avoid spam.
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Old 02-28-2010, 07:24 AM
 
Location: Steilacoom, WA by way of East Tennessee
1,049 posts, read 3,847,231 times
Reputation: 702
I went to KFC in JC yesterday after watching "Crazies" (not that crazy about the movie, was ok, not great). Anyway, there were empty suites in the strip mall across from toys r us, which is across from the Mall. Crazy how you can have an empty prime location, I'm guessing that will be temporary, (hopefully).

There are a few new buildings that were built on spec without any renters, that place that was built on fill on Bristol Hwy down from Carl Gregory's car place and a few other small places that are brand new but empty.

I was reading a report from Elizabeth Warren (economist hired by the congress to figure whats going on with the economy), she said that 1/5th of all commercial loans are under water currently and 25% of the same loans will be underwater by 2011. The bad news about that is local banks are the ones who did the CRE loans. I have faith in our local TN banks, in general, the mentality in TN has been a conservative one (from my observations).

I've chosen to keep my big mouth shut (for the most part) over the last year or so, because before that I would bore you to death with where the economy was going due to the housing bubble. That bubble popped and has come and gone, the CRE bubble is fixing to pop, but I don't know what it means for us here in TN. Not much is what I'm hoping for, but CA, FL?

Take care all, I'll continue to lurk from time to time and keep my rambling posts to a minimum.

Tony

p.s. I've had several interviews at the local VA, so hopefully I'll get a local job and not have to drive to Asheville everyday to work, but the jobs I applied for are non-LPN jobs. I can't afford to work for what they pay LPN's locally.
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