Branson/Tri-Lakes News: Brokers release real estate report

In mid-February, the two launched the 2007 Real Estate Report as an advisory tool to help investors and developers limit their financial risk and not overbuild in certain sectors of the local market. Critchfield and Huels formed Commercial One Brokers LLC in June to serve clients who want to sell, lease or purchase commercial property.

Overview

According to the report, Branson’s real estate market is expanding, backed up by tax and construction figures for 2006. The city of Branson set an all-time record for total construction last year of more than $215 million. In 2006, the city also collected a record amount of sales tax, with revenue totaling $13.1 million and tourism tax revenue totaling $11 million.

The real estate partners say the use of tax increment financing and the community improvement districts that have financed several area projects is vital to continuing this trend.

“The TIFs, if done right for the right reason, will generate new income that wasn’t here before. Those projects would never have happened, and it doesn’t hurt existing businesses,” said Huels, a certified commercial investment member. “Branson is being shown as an example of the right way to use the TIF and CID from the state economic development department.”

Residential market

According to the report, after four years of increased sales, the area’s residential market has declined by 3.5 percent over the record year of 2005.

The local market may be affected by the national market, which saw declines up to 30 percent for single-family and condominium sales in some cities. Buyers in the Branson market may be having a tough time selling their homes in their hometowns.

Homes priced at less than $225,000 have been strong sellers and those priced at $175,000 or less account for about 75 percent of the listings sold. The report suggests that, based on the total number of listings in 2006, overbuilding has occurred in homes priced at more than $350,000.

In the multifamily market, investors will have to lower the amount of rent they expect from many new apartments and duplexes being built. The report suggests that units expected to rent for $900 to $1,100 a month may need to be lowered to a more affordable $750 a month. The best opportunities for 2007 will be the tax credit projects that can offer rents of $300 to $400 a month, affordable to employees driving from surrounding counties.

Office and retail market

With the addition of more than 86,000 square feet of new office space in 2006, the overall occupancy rate in the Branson area is 70 percent.

“We have found the offices were bigger than the typical suite the tenant was looking for,” Critchfield said.

He said some owners are dividing 5,000-square-foot suites into 1,200-square-foot to 1,600-square-foot spaces.

Retail space, on the other hand, is near capacity with an overall occupancy rate exceeding 96 percent in 2006. The outlet mall properties submarket fell short of that figure with a current occupancy rate of 92.2 percent, while the new Branson Landing recorded 96.5 percent occupancy.

Hospitality market

Branson hotels have outperformed properties in many other tourist destinations and major markets in the Midwest due to an increase of 500,000 visitors to the area in 2006. Many new visitors interested in Branson Landing, Branson Convention Center and other newer venues will be looking for higher-end, full-service properties with brand names and interior corridors.

Another trend in the hospitality market is single-residence occupancy at motels.

“People are looking for certain hotels to rehabilitate to accommodate transient workers like the construction workers, technical people and dancers in shows,” Huels said.

Wrap-up

Critchfield and Huels plan to prepare the reports annually.

“This year, we are building a database. Next year, it will be better,” Critchfield said. “It will be more detailed.”

Added Huels, “We will be able to forecast the time to fill or sell (real estate). It gives the community something to look back on.”

Commercial One Brokers also has been sharing the information with local banks and their customers.