It Was Hard Enough To Sell A Car; For Many, Now All That's Left To Sell Is The Lot
THERESA SULLIVAN BARGER
March 03, 2009
Just a couple of years ago, some Connecticut auto dealerships held such coveted locations that even profitable dealerships were being approached by other retailers that wanted to buy the properties.
Those days are gone. With the weak economy and retailers scaling back or going out of business, about 50 automobile dealerships in the state that closed in the past 14 months remain vacant, estimated James Fleming, president of the Connecticut Automotive Retailers Association.
Until the economy turns around, don't expect to see construction cranes replacing the "For Sale" signs at empty dealerships.
"I've seen downturns, but I have never seen anything like this," said commercial real estate broker Eric Litsky of Eric Litsky Associates of Simsbury.
Richard Parsons, a third-generation owner of the recently closed Parsons Chevrolet on Route 6 in Farmington, said he doesn't know what will happen to the dealership he built three years ago when he moved the family business there after 90 years on the "crazy corner" of Route 4 in Farmington, just off I-84.
"I'm mortgaged to the hilt. If there's a way I can keep the property and get a tenant that can offset the mortgage, I'd love to keep it," Parsons said. "This is 2009. These are uncharted waters."
In Hartford, C. Bowie Thomas, president of Thomas Cadillac Jaguar, was using a snowblower Monday to clear the sidewalks at the North Meadows dealership 10 days after it closed. The Jaguar business was sold in late January.
"You caught me on my first day as snowplow man," Thomas said.
Thomas and his brother, Douglas, are putting the 7-acre Weston Street property with its 26,000-square-foot showroom and service center on the market for $3.5 million. They would lease the space to a tenant, but they know it could be months before they get a bite either way.
"I think it's going to be another dealership," said Douglas Thomas, the dealership's vice president and general manager. "We're banking on that by leaving everything as it is."
Tenants are hard to come by in the recession, and with credit tight, investors can't get the financing they need.
"A real estate investor needs cash flow. To buy one of these properties, you're buying and holding," Litsky said.
Typically, car dealerships are in high-traffic areas, so "the real estate itself is quite valuable," Fleming said. "It could be used for a lot of different purposes. Given the economic climate, there's not a tremendous amount of expansion of business."
In the past, former dealerships have been razed to make way for new construction of home centers, drugstores or other national retail stores or renovated for new uses. For example, The Powerhouse Gym occupies a former Acura dealership in Berlin, and a former Hoffman Auto Group building housed a Munson's Chocolate store until that structure was torn down to make way for a Best Buy in Simsbury.
Litsky's favorite example of a creative reuse is the University of Hartford's renovation of the former Thomas Cadillac location for the Handel Performing Arts Center near the campus.
Gary Reynolds, owner of Reynolds Garage and Marine in Lyme and a Connecticut director of the National Automobile Association, said if federal bailout money helping banks back loans to dealerships to buy inventory doesn't start flowing within 90 days, Connecticut will see more dealerships closing. Dealerships can't survive without access to credit, he said.
Reprinted with permission of the Hartford Courant.
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