By Ron Hollowell

With Lake County's commercial real estate market strapped in for a tumultuous roller coaster ride that parallels the nation's economic woes, not everyone with a cast-iron stomach capable of enduring the ups and downs is falling off track. Some brave souls are investing in Lake County and they have made a conscious business decision to ride these trying economic times to the end of the line.

Rick Ferris, president of Sequoia Realty Corp. in Mentor, has been serving commercial business needs in Lake County for more than 25 years. Ferris admits there is a crisis in the economy - both nationally and locally - particularly in the commercial real estate market. He believes the general feeling among business owners is that commercial real estate is fundamentally strong and development in Lake County remains a sound investments.

"A crisis leads to great opportunities with buying and leasing, and selling and leasing as well," Ferris said. "There are good deals out there to be had. The owners of some of these commercial real estate properties in Lake County need to realize this and make some deals."

Although there is a shortfall in capital in Lake County, money can be had for commercial ventures, Ferris said.

"Those with maturing loans could have difficulty (getting capital)," he said. "Property owners can find themselves in hot water if they are unable to receive support for refinancing loans as they mature."

Just what the doctor ordered

Last spring, long-time Eastlake dentist Dr. Jeffrey Gross faced a dilemma that many business owners encounter at some point in time - his office space could no longer accommodate his burgeoning practice.

Gross didn't look far in his quest for a new building. He merely peered through the blinds of his front window and saw potential in the vacant Sky Bank building on Lakeshore Boulevard, a quarter mile west of Ohio 91, and directly across the street from his long-time office. He quickly realized the bank property was prime real estate in which he wanted to sink his teeth.

Part of the reason Gross is beaming is because Eastlake City Council diligently worked with him to retain his business in the city. Trying to secure the building proved to be a somewhat arduous task for Gross, but he was encouraged by the strong support he received from Eastlake city officials.

When it was determined that Gross needed to add 1,800 square feet of space to the building, he was surprised to learn the city did not have an ordinance for making an addition to a nonconforming building. In an effort to keep Gross in Eastlake, city council created an ordinance to allow for the addition.

"Mayor Ted Andrzejewski and the entire city council couldn't have been more supportive of me," Gross said. "They did everything they could to make it possible for me to so stay in Eastlake. I appreciate all they have done."

Gross estimates he has spent more than a quarter of a million dollars of his own money to renovate the building - demonstrating his strong desire to invest in Eastlake. He personally saved the money over a five-year period to avoid taking out a load - and he did not raise the price of any of his services.

Banks tightening the reins

Gross' ability to finance his own move, expansion and renovation is far from the norm among Lake County business owners. Securing commercial load is becoming a somewhat daunting task for business owners, according to Brian Finkler, branch manager of Van Dyk Mortgate in Wickliffe.

Finkler says Lake County business owners continue to be confronted with limited opportunities to receive a commercial loan. Banks are tightening their credit reins, making it difficult for business owners with excellent and good credit ratings to get a loan to purchase commercial property.

"It used to be that if you had a credit score of 600 you could get a commercial load," Finkler said. "Now the better commercial lenders are only interested in those business owners with credit scores of 640 and up. The constraints of the economu are forcing banks to be more selective when it comes to commercial lending."

Lease or buy?

With banks tightening their belts on lending, there is a trend toward leasing in Lake County, said Neil Sawicki, broker/president of Mentor-based Global Real Estate Advisors Inc. Sawicki says Lake County's commerical market is an owner-user market, which means most companies are launched within the confines of small rental units. Once these companies grow large enough to require about 8,000 square feet of space or more, they purchase buildings because of the tax advantages associated with ownership.

Corporations have an advantage due to the Economic Stimulus Act of 2008 that allows companies to depreciate assets put into service at 50 percent during their first year in business. The ESA was developed to provide an expedited economic stimulus to the economy, enablign companies to reap great savings, Sawicki said.

"I work this market quite extensively and I have noticed that since the downturn in the economy most companies, even in Lake County, are leasing short-term with options to purchase," Sawicki said. "Property owners are willing to ride out this downturn in the economy."

Commerical real estate advisers like Global Real Estate Advisors have adjusted to changes in the market and now work with property owners and prospects in the market to plan for the future.

"We currently have about nine properties under contract with potential purchases and new lease tenants coming into the area," Sawicki said. "But if you're a business owner and you can buy now, then it is now more beneficial for you to do so because of the state of the economy."

Valuable information

In early November, the real estate and construction group at Skoda Minotti, certified public accountants and business and financial advisers, released the results of its survey of the real estate and construction markets in Northeast Ohio.

The survey results were gathered during April and May 2008. The surveys were sent to more than 800 members of the Northeast Ohio real esate and construction communities. The surveys cover a variety of topics, including political insight, financial issues, the local economy and industry trends.

"With the recent turmoil in the local economy, especially in the real estate market, our goal with this survey is to provide some insight to our clients and contacts as to wher the real estate and construction industries are headed in the future," said Roger Gingerich, principal-in-charge of the firm's Real Estate and Construction Group. "After reviewing these results, we feel the information contained in the surveys will become very valuable to businesses in the industries as they plan for 2009 and beyond."

Determing the best course for their company won't be getting easier for Lake County business owners anytime soon. They can, however, take solace in knowing they have viable options from which to choose to enable their businesses to thrive and succeed in an unsettling economy. To request a complete copy of the survey, email Gingerich at rogergingerich@skodaminotti.com.

Ron Hollowell is a Hambden Township freelance writer.