Former GM, Chrysler dealerships shift from selling cars to selling lots

Pittsburgh Business Times - by Tim Schooley

Faced with a car company that no longer wants him after his family had been selling its product for nearly 50 years, Greg Burgunder is shifting gears from selling cars to selling off his dealership.

“You have got to be a realist and you have to move forward,” said Burgunder, owner of the Burgunder Motors Inc. dealership in Bridgeville that Chrysler announced as one among 12 in the region and 789 nationwide it plans to eliminate as part of its Chapter 11 bankruptcy consolidation. “When one door closes, another opens.”

Within only a few weeks, Burgunder’s decision to shut down has already resulted in a sales agreement for the dealership’s property, a nearly four-acre parcel with a 25,000-square-foot building just off Interstate 79 in the fast-growing southern suburbs. He declined to disclose the buyer or the price.

In the wake of the painful restructuring of Chrysler and GM, two of America’s big-three automakers, the echo of car doors closing may be followed by an historic sell-off of car dealer properties at a time when commercial real estate already is in the midst of a difficult slump.

Along with Burgunder and 11 other area Chrysler dealers deciding what to do with their dealerships — options include selling used cars or closing up shop — another wave of closing dealers will soon follow as General Motors negotiates its own Chapter 11 reorganization.

During a June 12 hearing before the House Energy and Commerce Committee’s subcommittee on oversight and investigations, GM revealed it plans to eliminate 90 of its dealers in Pennsylvania over the next 12 to 17 months.

While those dealerships have yet to be made known publicly, they will gradually be revealed and added to the already closed car dealerships that dot the commercial real estate map in the Pittsburgh area and elsewhere as part of GM’s strategy to consolidate from more than 6,000 dealers to 3,380.

“It goes without saying that having a glut of properties on the market could not come at a worse time in our development history,” said Herky Pollock, the national director of the retailer service group for CB Richard Ellis Co. “I see it as future opportunity with challenging existing conditions.”

Join the club

It’s not like there aren’t already closed car dealerships.

Along heavily travelled McKnight Road, for example, the former McCrackin Ford property remains empty and available two years after Wal-Mart bought it for a new store, a project long stalled. In the city, Day Automotive Group has been advertising it will close down its Baum boulevard Dodge operation, which also didn’t make Chrysler’s cut.

That’s just a few blocks down the street from the former Don Allen Auto City, which the Voelker family closed last year with plans to pursue a major redevelopment project of more than 750,000-square-feet of offices, retail space and residential units.

While the Voelker’s development partner, DOC-Economou, walked away from the project a few months ago, sources familiar with the project, who spoke anonymously due to the sensitivity of the negotiations, indicate that South Side-based Armstrong Development Co. is considering the project.

Richard Voelker wouldn’t comment on any project or development partner and said to expect an August announcement. Armstrong did not return calls for comment.

Bought or blight?

Jeff Stephan, a commercial real estate broker for Coldwell Banker, has been attempting to sell the former North Star Ford dealership in Carnegie after it moved to Moon Township, taking over the location of a dealer who retired there.

Despite working with a strong location just off Parkway West, he said selling the property has been a challenge for a dealership that has now been closed for two years.

“We had this property under option for eight months and then tried to attract users for new retail and couldn’t do it,” he said of the marketing effort last year, when large retailers were beginning to cut back their expansion plans.

Doug German, the retail manager for Downtown-based Howard Hanna Commercial, expects to see car dealerships in highly desirable locations sell quickly while others may not sell at all.

He’s involved with three dealership properties for sale.

“There are some dealers out there with some great locations. Those will go,” he said.

The others?

“They could be a blight on their communities for some time,” he said.