Multi-family projects pick up in Greeley

Yet another long-stagnant piece of the construction and real estate market in Weld County is crawling slowly out of the recession and could make quite a comeback in 2013.

The numbers are still small, but they’re six times what they were last year, and are growing a little bit every month.

We’re talking about building permits issued on multi-family housing units, which have hit 42 for the year, compared with only seven in all of 2011, according to Tim Swanson, Greeley’s chief building official.

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The 2012 figure increased from 19 to 42 in just one month, from October to November.

The value of the approved projects tops $4 million, compared with just $723,000 in 2011.

Keep in mind, these numbers mark the units of multi-family being constructed, not the number of buildings. Regardless, it’s a positive trend with more good news on the horizon.

Two more developments, one with 94 units and the other with 24, are in the final review process with the city, according to the economic development department

These new apartments and condos are being constructed by companies like J &J Construction, an arm of Journey Homes of Greeley, the company responsible for developments like Pelican Ridge and Maple Hill in Fort Collins and Johnstown Farms.

It’s no wonder that some builders are catching on and ratcheting up multi-family activity in Greeley. With all that oil and gas activity and the flood of workers who arrived to staff the Leprino plant last year, available residential space has been growing scarce in Weld County’s largest city.

Vacancy rates in both single- and multi- family have been so low in recent months that even the local hospitality industry has benefitted, with energy workers looking for a relatively temporary living situation filling hotel rooms.

The multi-family vacancy rate as of the third quarter was 3.1 percent in Greeley, and although the state Division of Housing doesn’t track single-family vacancies outside of metro Denver, anecdotally, property managers in Greeley have told me that they are “overwhelmed” with calls inquiring about renting single-family properties.

Naturally, all of this has led to an increase in the cost of living in Greeley. The city has long been known for its affordability, with rental rates substantially lower than other cities in Northern Colorado

Make no mistake, Greeley is still much cheaper than Fort Collins, but the average rental rate for a multi-family unit in Greeley is at $693 per month, the highest it has been in years.

The situation has even created a bit of controversy, with a “man camp” popping up east of Greeley and creating health and sanitation concerns with the county.

As you might have read in my story on the cover of this issue, more than 5,300 jobs have been created in Weld County since 2009.

Meanwhile, according to city data, only 211 new single-family homes have been built in Greeley between the beginning of 2009 and today, and only 54 building permits were issued for multi-family units.

Of course, during the recession, Greeley did have a glut of vacant homes and foreclosures on the market, and nobody was building much of anything anywhere in Northern Colorado.

In some of my recent reporting, Chalice Springfield of Sears Real Estate told me that those properties, too, are seeing increased activity.

Greeley residents are beginning to purchase homes again, she said, with the number of active listings in the area dropping to 420 as of October, compared with 962 back in October 2008.

So, with the overstock of foreclosed homes slowly being absorbed, builders are getting back to work constructing multi-family developments. With all this growth, what’s left to hold anyone back?

Financing, by the sounds of things.

Local builders have a harder time getting loans from banks that are dealing with their own brand of recession fallout. National builders like Campus Crest, currently building The Grove student housing in Fort Collins, and owners of a similar development in Evans serving UNC students, are financed mostly through private equity.

One of the biggest issues related to financing projects that involve oil and gas workers is uncertainty about the future of the industry in Weld County. In other words, no one knows for certain when the oil will run out and the workers will move on to the next boomtown.

Perhaps, though, in the coming months, as Greeley and Weld County continue to grow and as the overall economy continues to improve, we will see more projects that are able to find financing, be it through equity or debt.

There are a number of positive indicators that should make financiers feel more confident in the Greeley area.

For instance, Greeley ranked fourth on a Pitney Bowes Software list released last month of the country’s fastest-growing metropolitan areas.

Between 2000 and 2010, Greeley’s growth rate was 4.1 percent. The city is expected to grow by 8.4 percent over the next five years, adding 7,637 new households in total, at an annual rate of 1.7 percent.

Upstate Colorado doesn’t appear to be slowing down on its job-creation efforts either. It reached a goal set in 2009 more than a year ahead of schedule.

Molly Armbrister covers real estate for the Business Report. She can be reached at 970- 232-3139, at marmbrister@ncbr.com or at twitter.com/MArmbristerNCBR.