A Conversation With … Gregg Stancer

How would you characterize the local commercial real estate market right now?
The commercial sector has been quite strong. We saw it start to come back about the middle of 2012. Then, by first quarter 2013, it was quite hot. In fact, 2013 and 2014 were some of the best years in that 31 years I have ever had. There was a lot of money sitting on the sidelines. When they jumped back in, they jumped back in in a big way.

One sector of the market we didn’t see, and still really haven’t seen come back very strong, is the office sector. Retail is very strong. Warehouse is extremely strong. Multifamily and self-storage are strong. What I classify as strong is an extremely low vacancy rate, but also, increasing rental rates. The single-family rentals, duplexes, multifamily properties are all increasing rates steadily since 2012. Those areas struggled in 2008 through ’12. You saw landlords giving free rent and incentives and rental rates dropped.

Why is the office sector lagging behind?
Everybody needs a place to live. The influx of new Springfield residents is helping residential rates. Office on the other hand, you are seeing companies downsize the number of people in a lot of cases. You are seeing people work from home. They have a laptop. They don’t need that physical space as much anymore. There are some sectors, such as medical and banking, who still need a professional environment. But with the advent of technology, people, like Realtors and insurance agents, can literally work from anywhere.

What did the industry take away from the recession?
During the recession, it was very hard for developers to get money. Subdivisions stopped. Spec warehouses stopped. Now, we are finally seeing the banks agree to loan.  However, it’s only to what they call globally sound developers. They analyze every customer globally. It can’t be just this project doing well, all of your projects have to be doing well to be considered financially sound.

Before the bust, if you had a good appraisal, they would loan you 80 percent of appraised value. Most projects were done with zero money down. From 1990 to 2008, if you saw a shopping center going up, an office building, an apartment complex, there was a 95 percent chance that developer was doing it with no money down. Money was flowing and projects were everywhere. All that has changed now. You now have to have a 15 to 20 percent cash  injection. You have to have skin in the game.

What are you working on right now?
We are in Phase V of this 36-acre storage facility at (Highway) 160 and Tracker (Road). I’m surprised it didn’t make the news with all the neighbors that showed up in opposition, but we finally were approved for a new multifamily development near the intersection of Republic Road and Golden (Street). We have 10.5 acres we just closed on.

It’s going to be a 68-unit duplex and townhome development. It’s actually going to be a multifamily subdivision. When we went to turn the plans into the county, the county was very pleased. They said it was one of the first subdivision plans they had seen for a while.

We are the developer in what will be called Golden Park. There will be three-bed, two-bath duplex units for $825 to $850 a month. The townhomes will look like The Woods at Campbell (Avenue) and Plainview (Road). Total project costs are about $7.5 million.

Where is the next big boom area for commercial development?
We are seeing east and northeast Springfield growing at the same pace, if not faster, than before the bust. The same with southwest Springfield. Those are areas where there was land available and utility services. There is new retail down there, CVS and Walmart, and you are seeing the need to widen arteries, like Republic.