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Photos Vincent Guadazno
Two of the increasing number of commercial properties up for sale are Silk & Feathers and Waydowntown. |
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Businesses for sale flood market
By Pru Sowers
Banner Staff
PROVINCETOWN — Like a party of old friends, perusing the real estate section of local newspapers these days finds a familiar face on almost every page.
More and more long-time established businesses are up for sale in Provincetown. Recent listings include Silk & Feathers, Waydowntown, Ross’ Grill, Land’s End Marine Hardware and a host of guest houses, some of which have been on the market for months. Recent sales include Tropical Joe’s, the Grand View Inn, Christopher’s by the Bay, Somerset House, Hurst House and The Commons restaurant and inn.
According to real estate brokers, their inventory of local businesses for sale is at an all-time high.
“Absolutely, yes,” said Nick Brown, owner of Thomas D. Brown Real Estate Associates, when asked if there were more commercial properties on the market recently. “It’s been accelerating for the last three years.”
“Inventory is certainly more than it has been. We haven’t seen the same number of commercial buyers coming into the market as in the past,” said Bill Dougal, a broker with Pat Schultz Real Estate who specializes in commercial properties.
The commercial market consists primarily of three groups of properties: guest houses, restaurants and multi-use buildings consisting of retail space on the ground floor and residential units upstairs. While there is still “a good, healthy” commercial market, according to Dougal, there are several factors pushing more sellers in the market and pushing out buyers, including an economic downturn in the tourism industry on Cape Cod and a tightening of commercial lending by banks worried about how new owners will be able to pay off the mortgage.
“It’s not unusual to see fewer buyers. Commercial values have not appreciated on an assessed value [as fast as residential] for the past few years,” Dougal said.
Paul Gavin, chief tax assessor in Provincetown, said commercial valuations in fiscal year 2006, which are based on calendar 2004 actual sales, rose approximately 17 percent, as compared to 21 percent in the residential sector, which is comprised of single-family homes and condominiums. In FY 2005, commercial valuations, based on calendar year 2003 actual sales, rose 3.5 percent while the residential sector rose 8.4 percent.
“They [commercial property valuations] have been lagging behind somewhat,” Gavin said. “They are higher-priced properties and people are trying to make sure they can support the business [before purchasing it].”
Another reason so many properties are coming onto the market, according to Brown, is that many of the people who own them purchased the building or business when they moved to Provincetown in their early middle age. This group is now older and facing a changing demographic in town, where a new generation is not moving in quickly enough to replace them. As a result, Brown said, owners are not able to rent their space for the prices they did previously. And some storeowners have had difficulty generating seasonal sales of the past.
“Part of the turn-over is the unreasonable expectations on the part of owners in regard to leasing the business. They’ve seen their margins and returns dwindle. They’re aging now and they’re tired,” Brown said.
Strict comparisons of the number of commercial properties on the market now as compared to last year are difficult, Brown added, because of what he called “quiet listings” — businesses that are not officially for sale on the Multiple Listing Service but which owners would sell if a buyer could be found.
“That [MLS] is the merest fraction of what’s really on the market. I know of five or six places where they say if I find a qualified buyer, give them a call,” Brown said.
Candice Collins-Boden, executive director of the Provincetown Chamber of Commerce, said she has seen the same trend in the increasing number of commercial properties for sale in town. Her belief is that many of the properties on the market have been owned by the same people for several years and the owners are ready to retire.
“There does seem to be a lot for sale. I’m not surprised. Provincetown is changing. That happens,” she said.
However, Collins-Boden said she is worried in particular about restaurants for sale that new owners may want to convert to other uses. She pointed to Ross’ Grill and Michael Shay’s. Michael Shay’s in particular — though owner Shay Santos has said it will only be sold to someone willing to keep the restaurant open — may be ripe for a conversion to residential use, Collins-Boden said.
“Why are people going to come here if there is no place to stay and no restaurants open? It’s a crazy, crazy cycle we’re in,” she said.
psowers@provincetownbanner.com
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Jan 4th, 2007