300 apartments being built downtown — is it enough?
SHEBOYGAN - The first of several apartment projects that will bring more than 300 new apartments to downtown Sheboygan are nearing completion.
Encore Apartments, located on the former Boston Store site, are available July 1 — and the Portscape Apartments on South Pier already have tenants living in some units.
Both projects are already 50 to 60 percent pre-leased, which suggests a need for the market rate housing, but with two more apartment projects slated for downtown, the questions remains: how much is too much — and who are they for?
A market study completed a few years ago suggests the downtown can support the 300 apartments.
“That’s the equivalent of a 100-acre subdivision being built downtown in one year,” Dane Checolinski, director of the Sheboygan County Economic Development Corportation, said. “That is amazing, phenomenal, and yet still not enough.”
As the large corporations of the area continue to expand and add employees, the housing market has all but dried up in Sheboygan County, leaving many to find rentals outside the area.
About 17 percent of the Sheboygan County workforce commutes from outside the county, which is an economic loss to the community.
“Our companies, coming out of the recession, have came back very strong and have added about 1,000 jobs year after year,” Checolinski said. “The reality is, if there is no place for individuals to live, we won’t get them to live here. We have wondered if that’s why our commuting is so high, as we haven’t been able to keep up with the housing demand."
Checolinski noted that individuals first moving to a community tend to rent before buying.
The apartments being built target those populations: new employees of large companies relocating from population centers who are used to paying higher rent, according to Checolinski.
“Make no mistake: The target market for these apartments are not people who live here. They are the people we are trying to get to move to our community,” he said.
Each of the two new apartment complexes have specific demographics in mind — and it's not who you might expect. Monthly rent ranges from from $925 to $1,385 at Encore and from $1,150 to $1,600 at Portscape. Critics of the projects said Sheboygan residents would never pay those prices — but early rentals seem to be challenge that opinion.
“I think there are people in this community who will pay these prices,” Chad Pelishek, the city of Sheboygan's planning director, said. “The biggest units are leasing up first, and there is definitely a demand for that type of product in the market.”
The Portscape Apartments, with large, open-concept one- and two-bedroom units with attached garages, have found appeal from retirees and empty nesters.
“The draw here is you don’t have to do all the work of owning a home,” David Griffith, developer of Portscape Apartments, said. “When I see empty nesters and retirees, that’s the first thing out of their mouth: ‘I’m tired of the yard work, I’m tired of shoveling.’ They are done with that and are willing to pay the rent.”
Of the 52 units being constructed in phase one of the project, 41 are already rented. Phase two will see an additional 36 units built.
The Encore apartments, with underground parking, fitness center, and dog wash station, appeals more to millennials and new employees moving to the area. Much like Portscape, the 81 unit of Encore include washer and drier in each unit, high-end appliances and other amenities.
A third apartment complex is breaking ground later this month on South 8th Street near St. Cyril and Methodius Catholic Church. The 91-unit complex, to be called High Point Apartments, will have river and lake view apartments with large units on the top floor similar to penthouse suites.
Another project being planned by the county on 7th Street and Pennsylvania Avenue will add approximately 50 units, which would bring a combined total of more than 300 new apartments to downtown.
“With the number of jobs open in the county and the number of people coming into the area, I don’t think we’re at the saturation point yet,” Pelishek said. “I think when we get to the 310, then we need to back off and make sure it’s what we need to do, because we don’t need to build a bunch of buildings that sit vacant.”
The higher rents are partially driven by the economics of construction. The cost to build a new complex, with underground parking, fire suppression systems, and modern amenities, can be expensive, so higher rents are a necessity to make the project viable. But developers hope the projects will have secondary effects that could benefit those seeking lower rent.
The current lack of choice in apartment shopping could mean there are people living in existing Sheboygan apartments willing to pay higher rent for more amenities, which in turn could free up existing apartment stock to lower-income renters.
The projects will also likely drive growth in the downtown and South Pier districts.
“The location here along South Pier is phenomenal and I think our project will really be a catalyst for a lot of the retailers down here,” Griffith said. “It’s been a challenge for some of the retailers down here, and I think putting people down here permanently will help these businesses thrive.”
The economic benefit could have a cyclical effect, drawing more interest to the region and further benefiting large employers in attracting employees.
“Every downtown is built around a population center,” Checolinski said. “I think it will not only grow retail downtown, I think having that setting will help the majority of our big firms, because now we are starting to provide the environment their workforce wants.”
Hope is on the horizon for those seeking lower rent alternatives. The Washington School Apartments are likely to open income-dependent housing, and another project on Indiana Avenue is in the works that could provide additional "workforce housing" apartments in a lower-rent range.
Reach Phillip Bock at 920-453-5121, firstname.lastname@example.org, or @bockling on Twitter