Building blocks of growth

Building blocks of growth
The major construction projects in the city are more than obvious.

A new Wal-Mart Super Center.

A new 157,000 square foot medical school building on The University of South Dakota campus that, when completed, will cost $37 million.


What aren't quite as obvious are the construction projects completed by Jane and John Doe of Vermillion in the past year.

Chalk it up to favorable interest rates. Or a demand for new housing. Or a need to expand or improve a business.

Whatever the reason, a growing number of people decided to launch construction projects in 2005 in Vermillion.

"Our numbers are up this year," said Vermillion City Manager John Prescott.

The number of new single -family homes in the city is beginning to mushroom. In the fourth quarter of 2004, six such structures were constructed in the city limits compared to four in the fourth quarter of 2005.

In the third quarter of 2004, two new single-family homes were constructed in Vermillion, compared to nine in 2005.

There were seven new single-family homes built in Vermillion in the second quarter of 2004, compared to 10 in 2005.

Two new single-family homes were built in first quarter of 2004, compared to three in the first quarter of 2005.

Add up the figures, and it becomes clear that 2005's activity in this category is exceeding 2004's pace.

Seventeen new single-family homes were constructed in the city in 2004. Last year,

that number jumped to 26.

Multi-family units down

In contrast, 2004 was more of a banner year for the construction of multi-family dwellings in the city.

"In multi-family, we had two (building) permits in the first quarter of 2005 for six units, compared to no permits in the first quarter of 2004. In the second quarter of 2005, the city issued one building permit for four multi-family units, compared to six permits that totaled 74 units in 2004.

"In the third quarter of 2005, we had one permit for four units, compared with the the third quarter of 2004, when we had two permitsthat totaled 30 units," he said. "And in the fourth quarter of 2005, we had no permits taken out, compared to two permits for six units in the fourth quarter of 2004."

The total of multi-family building permits in 2005 totaled six for 24 units. In the previous year, seven permits were issues for exactly three times as many units � 72.

Commercial steady

The number of commercial building permits issued in 1984 compared to 1985 are nearly the same. A difference is the dollar value of new commercial construction in the city last year, especially with the completion of a new Wal-Mart Super Center.

"For commercial activity in 2005, we had seven permits taken out throughout the first three quarters compared to eight in 2004," Prescott said.

In fourth quarter 2005, one commercial permit was issued; three such permits were issued in the fourth quarter of 2004.

So our commercial building stayed at about the same rate," he said.

Construction trends in the city, Prescott said, represent the ebb and flow of activity typically experienced in communities similar to Vermillion.

"It looks like in 2005, the biggest increase was in new single family housing," he said. "One year, maybe commercial (construction) will be up, and that in turn will create a greater demand for houses. Sometimes there is an increase in new housing and that in turn creates a demand for commercial because you have more people and more jobs are available."

Shot in the arm

The construction activity experienced during the past two years in Vermillion's city limits � especially in commercial construction � represent "a shot in the arm" to the community's economy, Prescott said.

"In 2005, we had the Wal-Mart building permit, and in 2004 we had Mesaba Industries' permit. This doesn't include things like garages that are added on, nor does it include any new church construction or renovations to churches," he said. "This data doesn't include a tracking of residential additions or alterations that require a building permit aren't included in the above data."

The rate of speculative home construction at The Bluffs increased in 2005 thanks to a policy offered by the city. A person purchasing a vacant lot at full price to construct a new home could receive a second lot for free to build a spec house.

"I think there have been some builders who were going to build a house for someone, and it caused them to speculate and build another house or buy another lot at the same time," Prescott said. "I think this policy has led to some increased lot sales.I think it made a difference in

having some builders speculate and build an additional house."

The Bluffs, however, aren't the only place in the city limits where new homes are springing up.

"There likely may have been more people in Vermillion who were ready to move up into a better, new home, in part, because of favorable interest rates that made financing the construction a reality," Prescott said. "I think as people tried to decide whether to renovate or build or remodel, the rates made that look advantageous.

The addition of two major employers � Mesaba Industries and Wal-Mart, has also helped.

"Are all of these people going to move to town? No. But there are spillover effects for

every dollar that's spent in our community and jobs that are created," he said.

The University of South Dakota, with its ever-increasing enrollment, is helping to contribute to Vermillion's increased construction activity.

"I had an apartment builder looking at coming to Vermillion, and one of the reasons they did is they saw that the enrollment numbers were up at the university, with entry level or freshmen

students," Prescott said, "so they are more likely to continue to be here and continue to need housing in the future."

Benefit from builders

These construction trends mean local people who are in the business of building new homes and apartments are also giving a boost to the local economy.

"If they (the local builders) are working, they are employing people, they are buying things here in town, and they tend to buy those things through relationships they have with different suppliers in the community, and it's just a big cycle," Prescott said. "If they are doing well, it helps to fuel some other things and help them take off.

Prescott's figures only include new construction. They don't reflect additions or alterations to commercial property that began in 2005, such

as the expansion to Fullerton's Lumber, or the move of Subway Restaurant into a larger location.

New commercial construction that began in 2005 includes Wal-Mart, and a new church.

In the first three quarters of 2005, Vermillion has had $9.2 million of new commercial construction starts and additions to existing commercial property.

"So while the actual number of permits is maybe not substantial, the dollar figure of commercial construction is the highest for our community," Prescott said. "That's good growth for a community of this size, and I think in comparison to last year, those figures show some good trends for us."

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