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Published January 06, 2014, 12:16 PM

Permits for Grand Forks apartment construction spiked in 2013

Grand Forks saw a spike in the value of building permits in 2013, driven largely by a jump in new apartment and commercial construction.

By: John Hageman, Grand Forks Herald

Grand Forks saw a spike in the value of building permits in 2013, driven largely by a jump in new apartment and commercial construction.

While the total number of building permits issued by the city grew by just 5 percent — 1,506 in 2012 to 1,579 last year — the value of those permits grew from $127.7 million to $212.1 million — a 66 percent increase. There were eight “multiple dwelling” buildings that were permitted totaling $22.2 million in 2012. That grew to 31 buildings permitted valued at $76 million last year.

The average number of buildings for which permits were issued annually from 2003 to 2012 was 7.4, less than a quarter of those in 2013.

“The city’s growing and expanding and everything is doing quite well,” said Bev Collings, the city’s building and zoning administrator.

New construction saw an increase almost across the board. Single dwelling and townhome construction increased, as did garages and commercial projects.

Apartments

A jump in apartment construction is likely the result of low vacancy rates in Grand Forks, said John Colter, executive officer of the Greater Grand Forks Apartment Association. He said the overall vacancy rate shown by their July 2013 survey was 3.97 percent.

“Investors are looking at the current vacancy rates and they’re seeing the need for housing in Grand Forks,” he said.

Low vacancy rates were part of the focus of the city’s Blue Ribbon Housing Commission, which issued its final report in early 2013.

“Anecdotal reports suggest that new apartments are filling very quickly and vacancy remains low while rents continue to rise,” the report stated. “Housing professionals should actively monitor vacancy rates and prices over the short term to determine how the new units affect the market.”

The vacancy rate in the Grand Forks area was more than 9 percent in July 2010 before dropping to just above 2 percent in February 2013, according to the Apartment Association.

But last year’s apartment blitz may not increase vacancy rates significantly, said Mike Opp, a developer at Oxford Realty. He said people who settle for lesser apartment units will want to move up into higher-end buildings.

“It’ll be a trickle effect,” Opp said. “In my opinion, the new construction being built will open up the older, lower-income apartments.”

Opp said the city could use even more new housing.

“People from all over the country call into our office, looking to come to Grand Forks,” he said. “They get frustrated looking for housing.”

Single dwelling permits, meanwhile, increased slightly, from 106 to 109 between 2012 and 2013. The number of townhome permits issued more than doubled to 45 in 2013.

Grand Forks City Council member Dana Sande, who was a chairman of the housing commission, said he was disappointed by the small growth in single family homes.

“There is, in my opinion, still a significant pent-up demand, which is continuing to force the prices up,” he said. A typical home sold for more than $200,000 in Grand Forks in November, a number that dropped to under $180,000 in December, according to the city’s housing dashboard website.

Commercial building

After hovering around a dozen permits issued each year from 2010 to 2012, the commercial sector saw 23 new building projects receiving permits, which were valued at $44.8 million. There were also 237 permits issued for repairs or additions in 2013.

Barry Wilfahrt, president and CEO of the Chamber of Grand Forks and East Grand Forks, said the local economy remained strong through the recession, but growth remained relatively flat. He said 2013 was a year of catching up.

“And now the last couple of years as we came out of that recession, we’ve seen more building going on in Grand Forks,” he said. “And 2013 was a good example of that catch-up taking place.”

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