NOTE: This is an abridged version of a longer feature in the December Traverse City Business News, which arrives for subscribers and on newsstands Tuesday, Dec. 1.

Terry Beia and his partners had just sold some assets in their Traverse City-based oil and gas company, Omega Resources. So where to reinvest the gains? It was 1998, with investment choices galore, from a booming stock market to continued strength in the oil fields and natural gas world. But what about local opportunities, Beia wondered – why not purchase some downtown Traverse City real estate?

Today it sounds like a no-brainer decision, having the benefit of looking back over the 2000s and 2010s, when prices of commercial buildings downtown have skyrocketed in value – most ballooning 300-400 percent as downtown has boomed.

But back in 1998 – just after the opening of Grand Traverse Mall and before the reopening of the State Theatre – investing in downtown real estate was no sure thing.

In fact, says Beia, “it’s hard to believe now,” looking out across a bustling Front Street from his second-floor office, “but the outlook for downtown was really in question at that time. Merchants were jumping ship. Stores were closing, vacancy rates were climbing, and property values were softening.”

Still, Beia had confidence, and he convinced his partners to begin investing downtown.

“To me it was real simple…our walkable downtown with its proximity to the Bay and the cool, eclectic mix of mom-and-pop shops has always offered a more unique and appealing shopping experience. Add in some really great places to eat and drink, and you have the makings of a true hot spot,” he argued.

Soon, Beia’s company, Traverse City Development, made its first downtown bet – the purchase of the old “Arcade” building at 140 East Front Street.

But what soon followed weren’t exactly jealous howls by fellow businesspeople. Instead, eyebrows were raised. Why would someone think putting money into a sleepy downtown was a good idea?

“After we bought the Arcade and Subway (currently Harvest) buildings, we became known as the suckers that were investing in Front Street,” Beia recalls. “I started getting calls from other property owners looking to unload.”

And unload they did, with Beia gladly snapping up even more downtown spots. Within the next 4-5 years, Beia fielded those calls and kept investing.

It didn’t take long before Traverse City Development and its related entities added almost a dozen more buildings to its roster. The DeYoung Building, built using local brick and Perry Hannah wood by none other than James Munson. The City Center Building and giant parking lot behind it at the prominent corner of Front and Union, today home to The Dish Café, Good Harbor Coffee, James C. Smith Jewelers, and several upstairs business tenants. The Wilhelm Building at Union and Eighth (now home to AT&T and Beia’s own residence upstairs) and the former Hibbard’s Florist (currently Honor Bank) building across the street.

Looking back, current Downtown Development District CEO Jean Derenzy says Beia and his fellow downtown investors were visionaries at that time. “Terry knew that a strong city center was the key to building and developing the city and our region,” she tells The Ticker.

Soon Beia and his partners advanced further yet, taking advantage of still relatively underpriced properties by purchasing more commercial buildings and also some prominent apartment buildings and single-family homes with all the right addresses – Union, Front, Munson, Fifth.

In 2007, downtown’s growth became turbo-charged by the reopening of the State Theatre, and what seemed like overnight, downtown nights saw thousands of locals and tourists walking the streets, shopping, and dining.

Then came the 2008-09 crumbling of the economy. The Big Three automotive manufacturers wobbled, companies instituted layoffs – and the real estate market tanked. 

“Listen, I spent a lot of sleepless nights in bed looking up at the ceiling,” recalls Beia. But he didn’t buckle and he didn’t sell.

So what comes next?

“There will undoubtedly be economic cycles that impact all property values…in my opinion, it’s really not a matter of if but when.” But Beia’s not ready to sell just yet.

“I see our area as being somewhat insulated from big value hits, regardless of the length or severity of the eventual pull back,” he predicts. “The buzz is driving population growth, which in turn will drive demand. High demand leads to increasing real estate values.”

And the real estate values have certainly increased since 1998. Beia’s initial real estate purchases were in the $40-$50 per square foot price range. Today – in the rare instance that a downtown building even changes hands – the prices reach easily $200-$300 per square foot.