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Construction activity in Willmar, Minn., is picking up through first six months of year

Construction materials are seen Monday in this neighborhood of fourplexes near Pheasant Run on Willmar's southeast side. The city has issued more building permits for the first six months of 2012 over the same period for 2011. The city also reports interest in a new fourplex development for professional upper-level renters. Tribune photo by Gary Miller

WILLMAR -- Construction activity in Willmar is starting to pick up during the first half of 2012 compared with the same period in 2011.

Willmar Building Office Randy Kardell says the city issued five more building permits for the first six months of 2012 compared with the same period in 2011. So far, 251 permits have been issued this year compared with 246 for the same period in 2011.

Valuation rose from $6,757,843 for the first six months of 2011 to $8,848,279 for the same period this year.

Commercial structures, such as the former Runnings building on South First Street, are being updated, redeveloped and are being occupied.

"We are $2.1 million ahead in construction valuation than what we had in 2011. We're showing more construction activity, a lot more in commercial and commercial alterations, nearly $4 million more in commercial alterations through June 30, 2012, compared with the same period in 2011. So there's money being freed up and people are starting to do a bunch of work,'' said Kardell.

Bruce Peterson, director of planning and development services, said people are recognizing that the economy is turning and they're willing to make the investment because they realize that it is an investment and not just an expense.

"We're seeing the investment being made across the community, not just limited to First Street, as the most vibrant business area, but lot of money being invested downtown. Much of that may not be readily apparent. It might be some roof work. They are preserving the life of an asset, all good quality investments and investments that are necessary to make if you truly value the property you own,'' he said.

Construction of single-family homes is still slow. Through June 2012, the city issued four building permits compared with five issued for the same period in 2011. Interest rates, however, are the lowest in 40 years.

"I think when we're talking about numbers that low, a difference of one or two doesn't mean anything. We're just so far below what our peak years were,'' he said, which could have been in the early 1980s. "We're operating at probably 10 percent or less of our peak years for new housing construction.''

Even though new construction starts are down, the city is still exceeding the national average as cited in the monthly Dodge Reports, Kardell said.

"Throughout the United States, single-family and two-family homes are down quite a bit in construction starts,'' he said.

However, there appears to be a big push for smaller apartment buildings, such as the fourplex units being constructed on the city's east side. Those units are working out well for people, said Kardell.

"They're rented out even before they're completed,'' he said. "There's that waiting list of young people, newlyweds, looking to get in and get established and the empty nesters, the farmers retiring, are looking for a maintenance-free slab-on-grade something to move into. It's a wide variety of people that are moving into these rental properties.''

Peterson added that the rental boom has come at the expense of the downturn in the owner-occupied market.

"They can house the people that lost their homes to foreclosure and do not currently qualify for a mortgage,'' he said.

Peterson said he met during the last couple of weeks with two separate developers. One wants to do a series of fourplexes for professional upper-level renters and another that's looking at a planned unit development for single-family and twin-homes that would be rental market geared at $1,500-plus per month rents.

"There are people that have the money to pay those rents,'' said Peterson. "They don't buy a house because they had financial issues and they don't have the credit worthiness to buy a home. They've got the disposable income to pay the rents and there's a certain standard of housing that they desire.''

Single-family homeowners are making a number of improvements, Kardell noted.

"We're seeing a lot of decks, attached and detached garages, small room additions, entryway additions,'' he said. "There's home equity dollars out there.''

Kardell thinks 2012 will be ahead of last year's projections.

"Revenues will be ahead, but it should be an interesting year. There's a lot of work coming,'' he said.

"I think we bottomed out last year,'' added Peterson. "Hopefully the tide of construction is turning and we're on an upward trend again.''

David Little
David Little covers the Willmar City Council, Willmar Municipal Utilities and other city news.
(320) 235-1150