Sheboygan wants hundreds of spec homes and condos built for growing workforce

Real Estate Spotlight

The Encore, an 80-unit mixed-use apartment complex being developed by Oakbrook Corp., is expected to open this month in downtown Sheboygan.

If there is one thing Sheboygan County does not lack, it is employment opportunities.

In fact, with Kohler Co., Sargento Foods Inc., Acuity Inc. and Johnsonville LLC, the county’s employment roster totals more than 60,000 workers a day.

The 90-unit 8th Street Apartments, expected to begin construction this month.

The problem is, at the end of the work day, many of them go home to nearby Ozaukee, Washington and Manitowoc counties.

There are 47,347 households in Sheboygan County and despite the job growth, residential building in Sheboygan County began to slide in 2006 and has never returned, according to a study by Schaumburg, Illinois-based Tracy Cross & Associates Inc.

The Sheboygan County Economic Development Corp., which commissioned the $14,000 study, is attempting to turn this around.

“People would be moving to Sheboygan for work, but our population growth is stunted by our lack of housing,” said Dane Checolinski, director of the SCEDC.

Most of Sheboygan County’s population lives in the City of Sheboygan, which is located along Lake Michigan. For the past several years, work has been done to revitalize the city’s downtown and its lakefront.

The city and county have worked with developers to begin to solve a portion of the housing crisis – multifamily.

Since 2016, 240 apartment units have been completed, 208 are under construction, 245 are slated for construction and another 165 units are proposed, for a total of 858 units. Of those, 424 are in downtown Sheboygan.

Checolinski is happy with the number of apartment developments that have been built or are proposed and estimates the county will be at a 5 percent vacancy rate once all of the units are completed, as long as the population doesn’t grow.

“I think we could use another 200 new units every year moving forward, if we maintain our current job growth,” Checolinski said.

Now, the major focus is on single family and condominiums.

Sheboygan County needs hundreds, if not thousands, of homes to catch up so it stops losing potential residents who have chosen to live in new apartment and residential developments in Grafton and Manitowoc, Checolinski said.

But David Belman, president of Belman Homes and the Metropolitan Builders Association, said Sheboygan County is in a tough spot because it is located between two larger cities (Milwaukee and Green Bay).

“They have the employment and are a very business-friendly community, but until the growth and all of the infrastructure that goes along with it starts to come inward, it is hard to build,” Belman said.

That is evident in the lack of housing starts over the past three years.

The Encore, an 80-unit mixed-use apartment complex being developed by Oakbrook Corp., is expected to open this month in downtown Sheboygan.

According to the Wisconsin Builders Association, Sheboygan County had one single-family housing permit pulled during the first three months of 2017. By comparison, Ozaukee County has had 42 permits pulled, Washington County has had 70, and Manitowoc County has had seven.

Sheboygan County had nine permits pulled in 2016 and five in 2015.

Belman said despite the jobs in Sheboygan County, it still might be cost prohibitive for developers to build there.

A 2016 National Association of Home Builders report found that on average, local and state regulatory costs total $84,671 per home built, which has slowed the pace of new homebuilding across the state overall.

That, coupled with the cost of land, makes it difficult to build a house for less than $350,000, Belman said.

“Sheboygan County has many employers, but many of the jobs are still manufacturing-type jobs and unless you are working in upper management, you are going to be priced out of building a new home, unless you are thinking outside the box,” Belman said.

Checolinski said several of the municipalities have been working on various outside-the-box proposals to make it easier for builders.

Sheboygan Falls is currently creating a residential nostalgic district that calls for smaller lot sizes and homes.

Other municipalities are discussing creating mixed-use tax incremental financing districts that would include commercial development to help offset the cost of infrastructure for builders and special assessment districts, Checolinski said.

“For some reason, we had this notion of the middle class wanting to spend two hours a day to keep their properties nice,” Checolinski said. “Millennials and empty nesters don’t want to cut large lawns. We think if we can build smaller homes, in bulk, we can get the price points down.”

Checolinski said he knows developers are still wary of the condo market and possibly even Sheboygan, but with the number of employers and the amenities downtown has to offer, the market is there for success.

“Spec housing and condos in downtown Sheboygan is a solid bet,” Checolinski said “I think that if we started building 1,400-square-foot homes with two- car garages, developers would be pleasantly surprised how quickly that product would move.”

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