The bad news is, the local commercial property market is in a slump, along with the national economy. The good news is, it can’t get much worse, and actually may be on the upswing, according to area real estate agents.
For the past six or seven years, the commercial real estate market in the Northwoods has been-to put it mildly-slow. Local agents have noticed, of course, and it’s certainly made their job more difficult.
“I’ve had to take business out of town,” says Pete Tenderholt, an agent with Coldwell Banker and CEO of Northwoods Real Estate Specialists in Rhinelander. “The cost of business here is high. Property values, as perceived by owners, are higher than in other parts of the state and our taxes and fees make it difficult to sell the area.”
Part of the problem, says Tenderholt, is the fact that this area is seen as a “B” location. Big chain stores are looking for a market population of 50,000 or higher. “We do draw that, though,” he says. “We funnel people in from a large area to the north, including the Upper Peninsula of Michigan.
“When Menards came in, we blew them out of the water,” he explains. “Their sales skyrocketed well beyond what they expected.”
Creative marketing may save the day, according to Tenderholt. “We have to start putting together strip malls and mini malls,” he says. “Bundling, sharing expenses will make it possible to bring more businesses in.”
Also on the positive side have been changes in the way local governments are approaching the issue. “The city of Rhinelander has made some big changes recently,” says Tenderholt. “The old rule of thumb seemed to be: If you want to do business here, bring your checkbook.
“A new attitude has started coming out of the city administrator’s office. They’ve been helpful and cooperative like never before,” he says. That is a big deal. Long, drawn-out permitting processes that delay planning and building have a huge negative impact, according to Tenderholt.
City Administrator Blaine Oborn has been instrumental in that change. “We want to be seen as accommodating,” says Oborn, who has now served the city for almost a year. “It’s been an ongoing, evolving process to be more helpful, answering questions, walking people through the process.
“Of course, it’s our job to maintain the viability of the community, but our goal is to help grow our local economy and help create jobs,” Oborn explains. “I’ve been networking with my colleagues in other communities who have had success. No need to reinvent the wheel here.
“It’s a competitive world out there,” he continues. “Businesses can always go somewhere else. Whatever tools we can use to make Rhinelander friendlier to business ventures we will consider.”
The city partnered with Downtown Rhinelander Inc. and the Cleary Foundation to create Downtown Works, a low-interest loan program to help businesses within the downtown BID (Business Improvement District) with relocation and renovation. The fund offers up to $20,000, with just a few strings attached. Dan Kuzlik serves on the board of Downtown Works and likes what he has seen so far.
“We’ve made seven loans and the good news is, they are all solvent,” he says. “With the interest now coming back into the fund-even though it’s low interest-we are able to make more loans.
“With the banking rules the way they are right now, it’s very difficult for businesses to get financing,” Kuzlik explains. “We plan to continue to offer this program and see it as a real asset to downtown.”
Local real estate agent Ron Skagen of First Weber Group has witnessed firsthand the impact the tight financial market has on commercial property. “We have way too much inventory,” he says. “Right now, there’s such a lack of confidence, especially in new businesses. Banks are looking for people with good credit and sound ideas, but the fact is, such a large percentage of them fail within the first year, they just can’t get the financing they need. No one wants to take the risk.
“Independence is the nature of this nation,” says Skagen. “We have a segment of the population who want to go into business, who want to be their own boss. But, unfortunately, right now there’s not a lot of help out there for them.”
Skagen does see signs of hope. “We’re in a depreciation cycle. Wisconsin residential property has fallen 6.4 percent on average,” he says. “But I think we’ve bottomed out.
“I’m feeling a definite resurgence and enthusiasm in the residential market,” he says. “It’s my suspicion that the commercial market will soon follow.”
Sue Schneider is a freelance writer living in Rhinelander. Her articles have also appeared in Living on the Lake and Northwoods ‘boomers and Beyond magazines.
Editor’s note: In the printed version of this article, Pete Tenderholt was mistakenly referred to as CEO of Coldwell Banker in Rhinelander. He is actually an agent at Coldwell Banker and the CEO of Northwoods Real Estate Specialists in Rhinelander. We corrected the error for the online version of this article and we apologize for any confusion this may have caused.