Having Fun In Real Estate
Dave Ten Cate is a lawyer who found out it was "a lot of fun doing real estate deals." That has a lot to do with the fact that today he and a partner own an up-and-coming commercial real estate company, Capstone Real Estate in Grand Haven, which recently completed its first development project.
Ten Cate, 45, is a native of Minneapolis who graduated from Calvin College in 1987 with a degree in philosophy and criminal justice.
"I was planning on a real estate career," he said, with a laugh.
Ten Cate went back to Minnesota and earned a J.D. degree from the University of Minnesota law school in 1991, then accepted a job with the Scholten Fant law firm in Grand Haven, where — like most brand-new attorneys — he did "a little bit of everything."
But Ten Cate is the independent type, so after a year and a half or so, he left Scholten Fant to open his own solo law practice.
"I loved that," he said, and it lasted eight or nine years. One of his regular clients during that time was IPA, the full-service commercial real estate development firm headquartered in Grand Haven since 1985, which now has more than 90 employees.
In 2002, Ten Cate joined IPA as its corporate counsel and director of brokerage services. He said he actually carried two versions of his business card. One identified him as IPA's corporate counsel and the other card identified him as IPA's director of brokerage services.
He jokes — at least half seriously — that it was handy having two business cards, because some business people consider attorneys "deal breakers." When meeting someone for the first time, he might give that person his card as director of broker services. In other cases, it would behoove him to give out his card identifying him as an attorney.
Ten Cate said he thought he had "found the Holy Grail" at IPA, but after a couple of years, "I realized, again, that working for somebody else wasn't all that I wanted it to be."
Two things happened at IPA that helped shape Ten Cate's course. As director of brokerage services, he worked closely with Mike Teeter and they became good friends.
The other thing, he said, was: "I was having a lot of fun doing real estate deals."
"Even when I joined IPA, I never thought in my wildest dreams that I would own my own real estate company," he said.
But that is what he happened when he started his own company in the spring of 2004. Teeter soon joined him as co-owner of the new business that they decided to call Capstone Realty. Teeter, 41, is well-known locally as a former pro football player who played with the Colts, Eagles, Vikings, Oiler’s, Panthers, and Cardinals during the 1990s.
Today Capstone has about 40 or 50 listings, according to Ten Cate, but the firm has also done some development.
"We made it our business to keep an eye on things and acquire (property) when it makes sense," said Ten Cate.
The two men and a partner bought the Chase Bank building on Washington Avenue in downtown Grand Haven last year. Ten Cate and Teeter moved into their new Capstone offices the day before Christmas.
"Our wives loved that," joked Ten Cate.
They formed a separate legal entity, Muskegon Chamber Building LLC, with additional partners, to build the new Hines Building in downtown Muskegon. The building was purpose-built to house the Muskegon Area Chamber of Commerce and was formally dedicated in late September. It is named for Larry Hines, who led the fund drive to enable the chamber to purchase its space in the building.
The Hines Building was designed as five separate commercial condos; two are sold and Muskegon Chamber Building LLC still owns the other three.
The Hines Building was Ten Cate and Teeter's first pure development deal, but "we have a couple others pending," said Ten Cate.
"We've got another lot in downtown Muskegon under contract, and we've got some preliminary drawings to put a four-story, 35,000-square-foot building on that. But we're in the process of trying to generate some commitments (from potential occupants) before we break ground," he said.
With the flurry of downtown development in the last couple of years at and near the site of the former Muskegon Mall, there is now "a fair amount of space that is on the market or coming on-line in the next 30 to 60 days," said Ten Cate, "so we've been a little hesitant to start generating more product right now.”
Despite that, Ten Cate said, "We're bullish on downtown Muskegon.”
"I guess we could say ‘cautiously bullish,’ because of the economy," he added.
"Banks, almost without exception, have become incredibly careful about lending money, and that has created a great vacuum in our market for buyers and for tenants," said Ten Cate.
Dave Ten Cate, center, meets with his partner, Mike Teeter, right, and a client.
He concedes that these are slow times for commercial real estate, a trend first noticed at least a year ago.
"The phone just doesn't ring," he said. "I think if you talk to any real estate brokers or developers, if they are honest, they will tell you the same thing," said Ten Cate.
One sub-market within commercial real estate that is viable is health care. Capstone Realty recently provided consulting services to Orthopedic Associates of Michigan, which is building a clinic in Muskegon.
"Most doctors ought to own (their business quarters), and the sooner they own, the better," said Ten Cate. "They're going to pay an awful lot of rent. They might as well be paying it to themselves or to group of which they are a part.
"Most doctors, because of their perceived wealth, have bull's-eyes painted on their foreheads," joked Ten Cate. Some developers, he said, see them coming and take advantage of them with high rents and "big fees up front."
While Grand Haven has long had a vibrant economy, he said, even there he is seeing signs of a slowdown. "Right now, to my knowledge, there are three storefronts vacant," he said, referring to the waterfront area downtown.
One of the downtown merchants moved to the new Grand Landing development on U.S. 31. Closer to Capstone headquarters, a satellite office of the Muskegon Chronicle closed in September.
Ten Cate said the credit crisis is real, although he thinks some of the anxiety felt across the nation is generated in part by the news media.
Whatever the root cause, it's impacting how things get done in commercial real estate, he said.
"The buyers and even tenants are standing in the corner with their hands on their wallets. They're going to wait and see how this plays out," he said.
"I'm a big fan of West Michigan, and I'm not a native so I don't think I'm biased. There's a lot of natural beauty in West Michigan and we have a good population here, a lot of entrepreneurialism. People want to live here," said Ten Cate.
"Are we going to have to re-invent the Michigan economy? Yeah. Because we're not going to continue to survive on the backs of the Big Three automakers or any other automakers, because they're all too smart to come here because they get taxed to death. So they're going to Tennessee and Kentucky.
"We've got smart people. We've got people who will come up with new ideas, and it will be okay. But it will take time, and it will take some change in the way the government works, too."