Commercial boon adds to steady growth

Wes Kinsey didn't expect some of the problems that arose when he and his business partners were planning a new $1 million building for My Daddy's Cheesecake in Cape Girardeau.

"We kind of figured there would be problems along the way and some did sneak in," Kinsey said.

There were sewer line problems and other bureaucratic red tape in getting the 5,500-square-foot building up in Cape Girardeau and opened by Sept. 5.

But now that it's up, Kinsey said, it was worth the hassle.

"We're really pleased with our new building," he said.

Still, Kinsey admitted it was something of a risk. Cape Girardeau is a smaller market. Half of their business is in St. Louis, where the cheese-cake makers send the product, and more than three-fourths of the business is outside of Cape Girardeau, through wholesale or mail-order accounts.

"But we wanted to stay," he said. "It's a good area. Even though Cape is a smaller city, it's a major hub for the area. It's a destination where people come to shop, eat and go to school. Plus, it's our home-town, so we wanted to develop our first major store in Cape."

A lot of attention has been paid to the cooling residential real estate market and its effects on the U.S. economy, but the commercial real estate market as remained bullish and consumer-based businesses across the country continue to expand.

The Commercial Lending Indicator shows an upward trend that may not slow down over the next year, according to the National Association of Realtors (NAR).

The CLI measures the commercial real estate sector's market behavior, providing advance assessments about market contractions or expansions. The CLI has increased by 2.5 percent during the second 2006 quarter over the same period in 2005.

Builders added 17,000 jobs in July, the most since February, with commercial construction accounting for more than half of the gain.

A similar situation is happening in Cape Girardeau. Through July, there were 20 more commercial construction permits than all of 2005, with 50 in all of last year with about 70 through June.

"We're already topping all of last year," said Tim Morgan, director of the city's inspections services division. "It's a safe bet we're going to top it and probably top it pretty good."

The valuation of construction so far this year is estimated at about $30 million, Morgan said, which is $10 million more than all of last year, Morgan said.

January through March saw 36 commercial construction permits and in April through June there were 34. The yearly totals this year will stop a two-year decline, in which commercial permits were down about 25 percent, he said.

Cape Girardeau Chamber of Commerce president and CEO John Mehner acknowledges he sounds like a broken record as the way he explains the city's success.

"Again, it's overused, but you have to go back to that regional hub deal," he said. "The retail selection here is phenomenal."

More than 80,000 people are in Cape Girardeau on an average day, going to work, attending classes at Southeast Missouri State University or visiting medical facilities.

"When they come here to do those things, they also shop and eat," Mehner said. "That's very enticing to a company looking to put in a new restaurant or store."

Those factors may seem like happenstance, he said, but good leadership over the last 50 years has helped enhance Cape Girardeau's position as a regional hub. Cities have worked together, transportation issues have been kept a priority and the job base has stayed vibrant.

"As diverse as we are, we don't have huge ups and downs," he said. "We're at a steady pace."

Local commercial brokers agreed with Mehner's assessment.

Bob Hahn, vice president of development for Midamerica Hotels Corp., said Cape Girardeau is successful at developing commercial properties, despite the fact it is a secondary market.

Several of the stores that Midamerica has recently brought to town -- Talbots and Coldwater Creek are examples -- wouldn't normally come to a town of Cape Girardeau's size.

"This is not the size of market they ordinarily target," he said. "We were able to show them that Cape had potential. There's more to Cape than just Cape. Cape has great potential. We have an active chamber and a great city government. That all adds to the mix."

It would be hard to find a better example than Midamerica's hospitality center. Midamerica tore down the old Holiday Inn and built a smaller Holiday Inn Express making room for several new restaurants, including Popeye's Chicken and Biscuits, Olive Garden and Panera Bread. Those new restaurants complement other Midamerica-brokered deals, such as Texas Roadhouse, Cracker Barrel and Red Lobster.

"I think we're in an upturn cycle," Hahn said. "It's just like everything else in business. You have your peaks and then there's some overbuilding and, that catches up and you start off again. But right now, Cape is at the top of its game."

Tom Kelsey, a commercial broker with Lorimont Place in Cape Girardeau, said there's "no doubt" Cape Girardeau is seeing a commercial boom right now, though he thinks it was much busier a few years ago.

"The thing Cape has going for it is steady growth, which is indicative of our region," he said. "There are a lot of different companies and businesses looking at us and seeing it's a good place to locate."

Lorimont has also been involved in several industrial deals, he said. At the first part of the year, there was plenty of industrial space, but much of that has been absorbed, Kelsey said.

"That's what we need," he said. "You have got to have jobs in order to support all these other businesses."