New housing investment spikes in 2017


By Josh Ellerbrock - jellerbrock@limanews.com



The newly developed Shawnee Lakes luxury apartments, located off Allentown Road in Lima, is one response to a growing demand for higher end rental housing.

The newly developed Shawnee Lakes luxury apartments, located off Allentown Road in Lima, is one response to a growing demand for higher end rental housing.


Craig J. Orosz | The Lima News

LIMA — In today’s economic climate, job openings are plentiful. Mid-level housing, however, is a little harder to come by.

But with evidence of expanding private housing investment and a few projects in the works in the region, that could change.

A decade after the Great Recession, new housing construction has finally hit the area in fits and bursts. But if the region wants to continue its upward economic momentum, housing numbers are going to have to rise in parallel to meet the evolving expectations of a generation that often rent more than they buy.

Housing and Hiring

The need for housing is not a new one nationally. A construction labor shortage and high material costs have slowed down housing construction across the nation, creating a housing shortage, and like many national trends, it took a bit longer for high housing demand to reach the region. This past year, it’s become a focus for economic development officials as employers vocalized their concerns.

“When our companies are telling us that housing has become a component of recruitment, that’s got our attention,” Greg Myers, executive director with the Wapakoneta Area Economic Development Council, said.

Myers said in one instance, a longstanding local company well-respected within Wapakoneta even lost a skilled candidate due to poor housing stock. The candidate wanted to make the move, but they couldn’t find a place they wanted to move to.

And that kind of example has both employers, housing professionals and economic developers worried that the ball needs to start rolling a little faster before the housing need becomes a major impetus to regional growth.

New Demand for New Housing

Back in February, economic developers in both Auglaize and Mercer counties, including Myers, decided to better identify needs. They ran a survey and held a 70-person summit in March to discuss the housing issue with both employers and housing professionals.

The survey found that while 94 percent of employers in the two counties expected to hire in 2018, many of their potential employees were most interested in apartments, especially rentals in the $500 to $700 range, as well as starter homes.

Jeff Dulmage, owner of Hartsock Realty, said he’s seen similar demand in Allen County throughout this past year.

“I’m seeing more and more demand for the higher end stuff. As our culture changes as a country, people are more open to renting a higher end property that has what they want. They don’t want to mow the yard. It’s more about a lifestyle. For some tenants, they would rather just pay a higher rent rather than have those other responsibilities,” Dulmage said.

In other words, newcomers want more than decades-old rental housing, but that’s exactly what the area has in spades. Take Allen County’s older housing stock, for example. A drive through Lima city limits is usually enough to show an observer that the area isn’t working with newly-built housing, and a dive into Allen County Census numbers confirms as much.

Out of Allen County’s roughly 45,000 housing units, 5,000 owner-occupied homes are worth less than $60,000, and another almost 5,000 sit vacant. For rentals, another 2,500 units fall below the $500 threshold set by both Dulmage and Myers as the low end that newcomers desire. As for age, more than 90 percent of Allen County’s housing units are 20-years-old or older.

That means while Allen County can boast of a decent 45,000 housing units that could be available, more than one fourth are undesired by incoming workers, and the rest are usually grabbed as soon as they hit the market.

“We’re still in a seller’s market,” Dulmage said. “There are 660 houses on the MLS right now. It’s a fraction of what it was five years ago.”

It’s enough demand that April Garcia, senior account manager with Fox Corporate Housing, has also taken notice as contacts to her office continue to increase this year. She gets close to 30 calls on average from individuals looking into the short-term housing offered by the company. Some need the housing for extended stays in the area as they work on short-term projects, but others need somewhere to stay as they search out housing in order to relocate.

“Last year to this year, it increased greatly. It just keeps getting busier,” Garcia said.

Investment on the Rise

With high demand squeezing the market, there are signs of movement. Local residents and outside investors are sinking more money in housing at the best levels in close to a decade.

According to the annual Building Permits Survey conducted by the U.S. Census Bureau, both Auglaize and Allen counties saw an increase of close to $8 million in the value of permitted private housing in 2017 when compared to 2016.

Some of that investment has been highly visible. Two projects — 43 Town Square and the Metro Center — are working to renovate old spaces in Lima’s downtown. A third — Shawnee Lakes – has wrapped up its Phase I construction, and its ranch-style units on the edge of Lima are being grabbed for $700 a month and up.

“When you look at Shawnee Lakes, a lot of people didn’t think (the rental price) was possible for our area,” Dulmage said.

In Putnam County, housing developments have been built and expanded in both Kalida and Glandorf. Those two developments, along with home construction throughout the county, has kept construction crews swamped, and housing demand relatively stable, Amy Sealts, director of the Putnam County Community Improvement Corporation, said.

On the economic development front, moves have also been made to incentivize housing. This past year, a multi-organizational initiative to lower water and sewer tap-in fees to better the business climate for housing development in Allen County was eventually embraced to spur investment.

In Wapakoneta, Myers and the City of Wapakoneta’s Land and Buildings Committee have begun to explore what can be done on the public side to make it easier for the private side to bring fresh faces to the area. One aspect explored, Myers said, is finding a good way — potentially through tax incentives — to update the older housing stock into housing stock more in line with what those settling in the area demand. Nothing has been passed by Wapakoneta City Council as of yet, Myers said, as they pursue their “due diligence.”

“(The demand) has definitely got investors considering things,” Dulmage said. “It just takes time.”

Putnam v. Allen v. Auglaize

While there’s good evidence that housing investment is increasing across the board, not all three counties are watching housing investment happen at the same rate. Even with 2017’s spike in private housing investment, Allen County just hit the same level Auglaize County had reached in 2015. Allen County reported $23.8 million in private housing investment in 2017, according to the annual Building Permits Survey.

In comparison, Auglaize County posted $33.5 million in private housing investment — a roughly $10 million difference — despite being less than half the size of its northern neighbor in terms of population. Putnam County, roughly one third the size of Allen County by population, reported $13.3 million in investment, or more than half of Allen County’s numbers.

The newly developed Shawnee Lakes luxury apartments, located off Allentown Road in Lima, is one response to a growing demand for higher end rental housing.
https://www.limaohio.com/wp-content/uploads/sites/54/2018/12/web1_Shawnee-Lakes_01co.jpgThe newly developed Shawnee Lakes luxury apartments, located off Allentown Road in Lima, is one response to a growing demand for higher end rental housing. Craig J. Orosz | The Lima News

By Josh Ellerbrock

jellerbrock@limanews.com

Reach Josh Ellerbrock at 567-242-0398.

Reach Josh Ellerbrock at 567-242-0398.

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