I took a month off from writing this monthly update and no one missed it, thanks for the grace. I was off fishing for a week, and it was great. For this month, I thought I would address the time it takes for these deals to come together (if ever) since some of you might wonder why you see little to no progress of some of the well-publicized projects.  

Since I started in this roll 32 months ago, we have been talking about some of the same projects. Aldi, Target, a downtown hotel, US Fish Wildlife, just to name but a few. What I have come to understand is the complexity of these larger projects. Even the simplest of the large deals takes a long runway to take flight. For the more challenging projects, the timeline can more than double. This is as frustrating for you as it is for me. I want to be able to report on progress and for most of what I do, I need a calendar not a stopwatch to measure movement. Some might wonder what the issues are that create the delays in decision making. I thought I would share a few insights into the potential roadblocks:

• Selling price whether land or a building. Many times, the seller has an overinflated value in mind that can cause deals to die before they begin.   

• Environmental issues are often unknown upfront and take time to understand if there is contamination. The question then turns to how much and of course the cost to clean it up. This process can be slow.

• At times, zoning can be an issue or the proximity to other businesses can come into play. I lost a sale of two Target parcels due to the proximity to the cement plant quarry even though the quarry was more than a half mile away. In this case, the government was the client (buyer) and had an exclusionary clause in the RFP for parcels within a mile of an active quarry or mining operation.  

• If a franchise is involved, the rules of the parent company controlling the franchise and its location play a large role.

• Most banks will put limits on how much they will lend tied to the ability of the business to service the debt. This is smart but in an inflationary period when building material costs are going up and the cost of money is rising, both present a challenge to the financial viability of the project. For many of the projects I am working on now, when they began, the Federal Reserve had not elevated interest rates and material costs were more normalized. Two years later post COVID, we have seen the impact on many prices of products. These increases in the last 12 months can kill deals.   

• The ability to secure approvals from various units of government. Some departments of the Federal government and the State work at their own pace which is often slow. Staffing challenges, no doubt, play a factor. This is not meant to disparage units of government or their employees. Some do a great job.  
• I have one federal project where the bids were due January 6th this past winter. There were four local bids. The government indicated recently that their evaluation of the four bids will not be complete until early next year.  
• Another project I was involved with took six months to get the state to issue a license.  

• Availability to find subcontractors continues to be a challenge. The delays in getting Marshall's underway were driven by this issue. The general contractor did not get bids for certain elements of the construction project. He could not start until some of these contractors were secure. Many of the outside developers would prefer to use locals but sometimes they are forced to go out of the area adding additional expense to the overall project cost.  

I hope this helps frame the challenges of getting some of these projects underway. I would like each update to reflect material changes on each of the projects I routinely discuss but as you see, there are so many complicating elements that slow these bigger projects down. The one exception was the Starbucks and WellNow Urgent Care. That project came together quickly and from initial contact by developer, to land acquisition to vertical construction. The developer was a well-oiled machine and did a great job.  

A few other things to share:

Defense Community Infrastructure Program – The County pursued funding for the runway project under this program. We learned last week that the county proposal was not selected. It was not for a lack of effort. The CRTC team and Steve Smigelski did a great job and put a compelling case forward.  

MEDC RAP Grant – The Grant request that Target sought to support a project on the former Habitat for Humanity site was submitted at the start of the summer. We should know where we stand by the time I write next month’s update. We are seeking $5.0 million to support an $11.0 million investment in a mixed-use project featuring retail on the lower level and upper-level market rate apartments. I am ever hopeful we will be selected.  

More to come next month. In the meantime, be well!  

Mike

NEMROC, Inc.

Northern Title & Escrow Agency

Northern Eye

Nowicki's Sausage Shoppe/The Old Polish Corner

Omega Electric & Sign Company Inc.

Ossineke Industries

Plowman's Collision Service

Pompeyos Mexican Grill

Presque Isle Township

R.A. Townsend Company

RE/MAX New Horizons

Red Brick Tap & Barrel

Ramada Alpena/Sneakers Bar, Grill & Arcade

Real Estate One of Alpena

ServiceMaster Home & Office

Sherwin Williams

Skiba Insurance Service

SkyWest Airlines

Specification Stone Products

Star Staffing Alpena

Straley, Lamp & Kraenzlein P.C.

Stratford Group Ltd.

Suez

Switzer Veterinary Clinic

Tarkington Family Dentistry

Team Elmer's

The Drug Store/Northern Exposure Framing & Matting

The Home Depot

Thunder Bay Accounting

Thunder Bay Electric, Inc.

Thunder Bay Eye Care

Thunder Bay Family Dentistry

Thunder Bay Fyzical Therapy & Balance Centers

Thunder Bay Tree Services, LLC

Thunder Bay Winery/Regalo Luxury Gifts

True North Radio Network

W.G. Benjey Inc./S&A Company

Weinkauf Plumbing & Heating, Inc.

Werth Development, LLC

West Design Center, LLC

White, Wojda and Curtis

Wolgast Corporation

Young Appliance, Electronics, Furniture & Mattresses

Zen 24 Hour Fitness Center