July 05, 2013
Hospitality: Summer Retreats
The Cape's auction market gains steam
As economy shows renewed vigor; entrepreneurs flock for a piece of the action
Jay Fitzgerald, Special to the Journal
Cape Cod's darkest days appear to be passing. The Bay State's No. 1 tourism retreat was ground zero for the real estate market's turmoil following the one-two punch of recession and the credit-market crisis of 2008. For Sale signs seemed to dot entire neighborhoods in the ensuing years, while foreclosure auctions of restaurants and hotels were frequent. Today, brokers say property auctions are once again on the rise on Cape Cod, although for entirely different reasons. To be sure, what was once a sign of the Cape's economic weakness has now become a sign of the region's recovery, as auctions of non-distressed properties have become a hot commodity among aspiring entrepreneurs eager to own their own bistros or bed and breakfasts. Take the Falmouth Inn, a 123-room hotel right on Main Street in the downtown area of Falmouth on Cape Cod. A family owned hotel, Falmouth Inn may need a little TLC, but otherwise it's in good shape with a strong business base, according to auctioneers and town officials. It's listed for a July 26 auction, but auction officials say there's a good chance the property probably won't last on the market until that date. It may well be sold beforehand due to its desirability, not its distress. "The response has been tremendous," said Justin Manning, president of JJ Manning Auctioneers in Yarmouth Port. "We've got numerous groups interested and checking it out. I'd be shocked if the process went as far as the auction." Falmouth Inn owner Gerry DiGiovanni couldn't be reached for comment. Local business officials confirm that the hospitality industry in general on Cape Cod has seen significant improvements over the past two years after being hard-hit by residential and commercial foreclosures during the downturn. That's certainly not the case with the Falmouth Inn, said Jay Zavala, president of the Falmouth Chamber of Commerce. "The Falmouth Inn continues to attract a good-sized business. It's in a good spot with steady business." The hospitality industry hasn't rebounded to the point where investors are proposing the building of new hotels. But they are exploring investments in existing hotel properties, particularly ones attached to the town sewer lines, such as the Falmouth Inn, a very desirable feature when selling properties, Zavala said. Though the Cape's hospitality industry hasn't yet fully recovered from the recession, Wendy Northcross, president of the Cape Cod Chamber of Commerce, said recovery has taken hold in the famous summer vacation land, and there seems to be less distressed sales of properties. "The recession is in our rearview mirror now," she said, noting that higher-end hotels are doing particularly well while mid-market hotels still have a way to go before full recovery. For his part, Manning said most people don't realize that 80 percent of his auctioneer business is actually selling non-distressed commercial properties, not the assets of struggling or failed businesses. "If I was only in the distressed-foreclosure business, I'd be extremely nervous right now," he said. "But I'm not nervous at all, fortunately, because we're starting to see a lot of (non-distressed) activity. The word 'auction' automatically triggers thoughts of 'foreclosure' and 'distress' in the public's mind. But that's not where I do most of my business."