One of Northwest Indiana's most prominent commercial real estate agents said Gary schools are asking far more for shuttered school buildings than what the market will bear and would be better off unloading the properties for $1 per square foot or less.
Aaron McDermott, president of Latitude Commercial in Schererville, questioned that Gary schools initially asked for more than $1 million for each of 33 properties last month, though the Calumet Township assessor's office redid the assessments for eight of those properties in response to a Times of Northwest Indiana editorial. McDermott said it wasn't at all realistic to ask for as much as $5.85 million for Dunbar-Pulaski Middle School, expressing skepticism whether the agency had much experience trying to sell commercial property in Gary.
"Even if there was a buyer not bright enough to realize what they were purchasing there isn't an appraiser in the United States that would be able to find comparable sales to justify the price," he said. "Therefore there isn't a lender that would loan any money on a project like this. When we run into situations like this my comment to the unrealistic seller is you need a sucker with cash and we aren't interested in wasting our time trying to do that."
Nationwide, more than 500 school buildings are currently listed on the popular commercial real estate website LoopNet. While a school district in San Diego asked for as much as $50 million, many of the former school buildings are priced between $39,000 and $200,000, including several abandoned schools in Detroit.
"If they were smart they would sell these properties for $1 (or less) per square foot to get them back onto the tax rolls," McDermott said.
So far, Gary city government put in the only bid of $100,000 for the Benjamin Franklin Elementary School property at 600 E. 35th Ave., which is about $1.3 million less than the asking price. McDermott said the buildings would continue to sit there for the foreseeable future with those asking prices.
"No one should applaud this 'effort' as it is a Hail Mary with no one in the end zone," he said.
The market isn't strong for school buildings that have sat empty and moldered for years in some cases, McDermott said.
"It is not only who would be in the market for a school building. It is who would be in the market for a potentially rundown school building most likely right in the middle of a neighborhood," McDermott said. "Typically the zoning/cohesive use would be a residential-style property like multi-family housing or something related to that. Then you have to think about who is building new housing in Gary when there is so much existing inventory available for sale already at greatly discounted prices."
While former schools have been turned into a community center in Griffith, condos in New Buffalo, Michigan, and an Irish American Heritage Center in Chicago, The Boys and Girls Club is the only successful case in Gary of a former school being converted into other use.
"Other markets have seen success in converting them but other markets do not have the issues Gary has with deferred maintenance and the locations of the properties in the middle of potentially abandoned neighborhoods," McDermott said. "If you look at how long it took from the day the Boys and Girls Club took over Tolleston until they raised the money to improve it, which still is not 100 percent complete, that was a tremendous effort that took years. They had a great team helping out and had very influential people in the community doing a lot of work. Unless it is to that scale it could take three to five years to raise the money needed to not only purchase but to renovate the school."
McDermott said some of the school properties would be more marketable if they were torn down, but the question is who would pay for it.
"I can’t imagine you find many comparable vacant special use properties in Gary selling for the kind of prices they think they can get," he said.