To Stay Or Go?

Businesses face rezoning

Chuck Niemann is sitting on some valuable California real estate -- and he is not impressed. Niemann, 68, owns the 38-employee George T. Hall, an $11 million distributor of control panels for industrial heat and air-conditioning systems. Niemann's 15,000-square-foot facility sits smack within Anaheim's "Platinum Triangle," defined by Disneyland, the Angels' baseball stadium, and the Mighty Ducks' hockey arena. Two years ago, Niemann's single acre might have been worth $1 million.

That was before the city rezoned his district in 2004, trying to create an urban downtown in suburban Orange County and doubling the price of land overnight. Louis Tomaselli, senior vice-president of Voit Commercial Brokerage of Orange County, is now offering Niemann $5 million for his land.

The neighboring businesses have already sold. But selling comes at a cost: higher prices for the next piece of real estate, higher taxes on that property, moving costs, changing phone numbers and addresses, and possibly lost business when customers can't find the company and go to a competitor.

As major cities rezone old industrial areas to make way for residential and mixed-use development, more business owners are finding themselves in situations similar to Niemann's. The value of their property has shot up, and their neighborhood is changing as landowners sell out. Yet they had planned on continuing the business and maybe even passing it on to their children. "We've got a management team that's been with me 35 years," says Niemann, who says it isn't worth it for him to sell, even at current prices. "They're like my kids. And then we've got my daughter coming up behind them. She is the generation that's going to be running this company someday."


Business owners are under particular pressure in Denver, Detroit, Boston, Los Angeles, San Francisco, Atlanta, Washington, Houston, and New York, says Dean Schwanke, vice-president with the Urban Land Institute in Washington. For those whose businesses are struggling, or for would-be retirees without clear successors, the higher real estate values are no doubt a boon. By buying out small business owners, Jeff Fuqua, president of development for Atlanta's The Sembler Co., says his company has "made multi-millionaires out of scores of people -- scores -- who were just gutting it out making a living."

Sometimes the few business owners who stay manage to eke out some benefits from the development around them. Tim Mealer is the owner of A&A Locksmith on Atlanta's Ponce De Leon Avenue, just next to one of Fuqua's new mixed-use developments. Since plans for the development were announced in 1990, land values in the area have gone from about $700,000 an acre to $3 million.

Mealer, 39, took over the lock and key shop 14 years ago. He says he has had several inquiries about buying his property over the past five years but isn't interested. "My father meant a lot to me," says Mealer, whose dad owned the company for 40 years and passed away in 2001. "This business means a lot to me." The renaissance nearby -- and the accompanying spree in loft building -- has been quite good for sales. And what would a mixed-use development be, after all, without plenty of small businesses?

By Katheryn Hayes Tucker

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