Detroit October 2022 Key Take Aways
Billy Morrison – Steelcase – Points out that for those employers asking for employees to return to the office, they should look into the depth of the reasons that they don’t want to return and make some foundational changes to avert those feelings for employees. He also states that from a Steelcase perspective, healthcare and education, continue to be busy. Corporate work is still slow.
Phil Seaver – ATA National Title Group – Enlightened the group regarding the overview of the aftereffects of hurricane Ian in Florida. Phil indicates that there are probably many “half-done” deals that are trashed by the hurricane and given whatever Florida laws may come into effect, they will have to work those out. Hurricane byproducts – like mold and other unpleasant things — will be a big point of contention for many residents. For new residents of properties anywhere, if they agree to occupy the property without the typical protocol steps, then anything that goes sideways must be worked out the hard way.
David Hart – Maddin Hauser – David indicated that the court system in Michigan is getting back up to speed on-site in the courtrooms. He also indicated that this is good because the depth of cases is getting deep and critical.
Mike Sabrosky – Oliver/Hatcher Construction – Michael reports that his business is pretty much the same as last month. The supply chain is still an issue. No major gain in delivery times, and he also reports that many trades are stabilized. Roofing material used to take 15 or 19 months, it’s down around nine to 12. Business is still moving forward. But they are seeing for the first time in three years, a little bit of a slowdown.
Todd Shelly – Professionals Engineering Associates – Todd alluded to continuity in staying busy; the workload is strong; the backlog is strong. His company has seen a little bit of a downtick in proposals over the last month, but Todd says it seems like they’re picking up again. Everything’s strong. They are busy across the board and growing. It’s typical for this time of year, as they typically have a big fall push.
Dave Dismondy – District Capital – Dave’s group is not doing a ton of multifamily right now, and single-family developments are cautiously moving forward. Dave indicates that he just doesn’t think the rates are going to hold, and they’ve got to come down. Clients are getting ready for pre-construction. He has projects going under construction right now. Some have deeper pockets than others. David reports that the younger generation of borrowers is banking on the rates going back to “normal”.
Scott Elliott – Signature Associates – Scott reports on a couple of new assisted living properties that have a unique financing situation. His company has been pretty busy trying to get some deals closed up here. He also has a couple of land requirements for various types of senior housing ones and active adult communities. He is representing a large developer out of Ohio who’s looking for 20-acre sites and good communities.
Tom Barrett – The State Bank – As indicated, rates are going up. And Tom thinks loan demand is starting to soften. I think most of the bankers especially the community bankers are a little bit spooked, and on the sidelines now not knowing how to price and not necessarily knowing how to go forward in terms of a balance sheet situation. Tom spent the last week checking flood insurance on our Florida collateral hoping that we actually have a live policy in front of us and the bank is properly listed I think bankers are preparing for the worst.
Nick Maloof – Associated Environmental Services – Nick reports that President Biden’s Build Back Better plan has a grant program that just funded the DRP for conducting pre-development and marketing due diligence. And Nick won one of the grants and alerted the group to let him know if they have any properties that could be developed as industrial or warehousing or EV or anything like that anything from 20 to 30 acres on up. There’s an application we can submit to the Detroit Regional Partnership, and they will pay 50% of the costs for what we call a tier three evaluation, which is kind of like a pre–Development Study. The VIP Verified Industrial Properties program to the Detroit Regional Partnership. It includes environmental utilities, endangered species, and soils. It’s all like a desktop review. There’s no actual physical due diligence, but it can probably cut off 30 to 60 days or more sale process. And if the site seems developable, there’s additional physical due diligence that we can do land surveying site planning actual environmental work wetland studies. This will give you a good overview of the property and its condition and development ability. And this is available basically in Southeast Michigan. So, we’re working on projects in Macomb, Oakland, Wayne, Washtenaw Livingston, and St. Clair counties right now.
Brett Bissonnette – Plante Moran – Brett is with the National Tax Office in Flint. He also leads the firm’s tax controversy practice. His group handles IRS audits interactions with the IRS resolving IRS notices, private letter rulings that type of thing. Brett does not have a lot of specific real estate tax advice today. Brett shared that the IRS side the IRS is slowly catching up with things. There has been a significant delay in processing 2020 and 2021 tax returns. Private letter rulings are an area that Plante Moran does some work in and specific to real estate. Brett indicates that they have found that there have been qualified opportunity zone elections that perhaps needed to be filed. Plante Moran has been able to submit private letter rulings to get that election taken care of and in certain circumstances.
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