25 years investing in Michigan City and The Goodman Effect

It may seem like a dream to many and there were plenty of naysayers on the SOLA project.  Some of that might be woven into the DNA of residents who have been promised growth for a long time.  It can seem surreal to some the scale of this project, which is certain to set the stage for future projects along the lakefront and the area just south of highway 12.

Enter Scott Goodman, formerly with Sterling Bay, the real estate development company which almost single-handedly turned around the Fulton Market district in Chicago. Mr. Goodman has now set his sights on Michigan City with the SOLA project.  No press, I repeat, no press, public relations campaign or story ever written about Michigan City in the 25 years that I’ve been working and investing there, has been as powerful as that Crain’s article.  To my absolute delight, and never in my wildest dreams did I expect to read about Fulton Market, arguably one of the coolest neighborhoods in Chicago, mentioned in the same sentence as Michigan City!  Scott Goodman’s decision to go long on Michigan City couldn’t be a better endorsement of what us little guys have been readying for over the last two decades.

I bet heavy early.  By the time I arrived in the late 1990s, the lakefront of Michigan City already had a long and rich history for 2nd homeowners for over 100 years.  More recent vacationers and investors either drove straight through Michigan City or bypassed it altogether on their way to Michigan. But that wasn’t always the case. At one time, Michigan City was the place to be. Downtown Franklin St. was teeming with theaters, restaurants, clothing, and hardware stores.  

I caught the tail end of the restaurant Maxine and Heine’s, which was a long-time staple for residents. Before you’d order your dinner, they would bring out a relish tray to every table with bean salad, cottage cheese, pickles, and bread.  An older gentleman once told me about a diner called Chicken in the Rough. Apparently that one was all the rage. Sorry I missed it!

In its heyday Michigan City would attract thousands of day travelers on the train and by boat.  They would walk to the beach from the train station straight down Franklin to the water. Because of the topography, when you got off the train, you could see the lake from downtown. Today the library blocks this view, as well as any direct path to the water, leaving today’s visitors not realizing how close they are to the beach, and some may not even know there is such a gorgeous body of water just a mile away.  Other coastal towns in the area understand this and have made it a priority to keep the commuter passageways to the lake open. They were also rewarded for this.

Like so many other small towns, Michigan City was not immune to the great “malling” of America. The once vibrant uptown was suddenly a giant sidewalk. No cars, and eventually no pedestrians, and as businesses moved to the south end of town, everything that gave the uptown a soul left as well.  

People stopped driving on the classic Dunes Highway and hoping to get to their other destination faster, they opted for Interstate 94. Michigan City lost a lot of its luster and, although maybe not completely forgotten, it certainly became an afterthought.

This is where I entered.  I wanted a bit of a slower pace at that time but didn’t realize I was about to face a screeching halt. I became a local real estate agent, following in my mom’s footsteps, and eager to get other people as excited as I was about the potential of Michigan City.  When talking to clients, I could barely get “Come to Indi…” out of my mouth before I heard the dial tone.  I decided to put my money where my mouth is; buying up a handful of properties on Franklin St., all while sometimes feeling like I was waiting in vain.  It was a bit of a moral imperative to invest in the town that you were making your living in.

New administrations would come and go. Some minor improvements would materialize, but really it just felt like we continued to limp along waiting for those aliens to appear.  Now, apparently, I look like a genius.  The tables have turned, and people are calling me asking about Indiana.  And although I bought early, the reality is the rate of return for investors and 2nd homeowners who purchased real estate in the last 5 years have yielded a far better return than me.

I was too early. I’ve had more risk, and carry flat to modest growth, versus the double-digit gains some people have seen. I saw this, but I am a stubborn man, and the pull to affect change was too strong.  Many people left Michigan City for greener pastures in local college towns, where new developments and downtown revitalization experienced exponential growth.

The city is now being courted by many developers, not just Scott Goodman.  Some have turned out to be charlatans, but others are very well-respected. You’ve heard me beat this drum before, but the relative risk taken by local entrepreneurs, restaurateurs, and investors far surpasses the risk taken by large developers with a large portfolio of projects where one bad deal would not tank the company.  By contrast, the real rolling of the dice has been done by the small investors, who simultaneously get things done and move the needle of progress that now have made the city more attractive to the larger developers.  

Often, all the eggs are in one basket, and the whole basket is risked for a shot at success.  I decline every invitation to go to the casino because I’m a realtor and investor, so I live in a casino every day. Realtors and investors must hedge, bet and fold every day. A realtor’s commodity is expertise and time, so you’d better spend it wisely.

Anytime there was a change in our house, my son called it “New Days”. New Days for Michigan City is here in the form of a new mayor, Angie Nelson Deuitch. I’ve been waiting for someone like her for a quarter-century.  Mayor Deuitch is a real local, whose pragmatic approach and ability to navigate the small-town political field is amazing.  No axe to grind, no hidden agenda; this woman has the ability and desire to do two things at once.  She cares about the people of Michigan City, wants to help the social issues that prevail and is all for the development of the city’s assets to improve the status of her city.  Watch as things will finally get done. I might have been early, but late to the party has its own set of pitfalls. At any rate, the risk is now baked out of Michigan City, creating opportunity for all, including those who will pile in after Goodman.