Housing shortage being addressed in Madison; five projects show growth

STAGING SHOWCASES the open floor plan of the new two-bedroom units at Lake Area Townhomes. Each unit includes an attached garage, a master bedroom with walk-in closet and large private bath, and a utility room with washer and dryer, as well as ample closet and cupboard space.

Developer Dean Gulbranson is pleased. When he developed a section of land in the northeast part of Madison for new housing, he didn't expect a quick return on his investment.

"Based on the history in Madison, I figured I'd sell a couple lots a year," he said.

Instead, in about three years, he has sold or has commitments on 15 of the 17 lots he had for sale along Heatherwood Avenue. While a spec house was built on one of the lots, most have been sold either to homeowners or to developers who have presold the home which will built on the lot.

"I feel Madison is a vibrant and growing community," Gulbranson said. "It will continue to grow with the support of the city and the demand for housing."

Gulbranson was just one developer to bite the bullet and attempt to address the widely discussed housing shortage in Madison. Brian Kern has expanded Lake Area Townhomes. Randy Hanson of Mills Construction plans to build the Silver Creek Apartments off S.E. 8th Street beginning early next year.

Nielsen Construction of Harrisburg is developing Cyber Estates east of Division Avenue and north of Gulbranson's development. A flyer indicates 33 lots have been platted, including 10 for twin homes, along N.E. 11th Street, Heatherwood Avenue and Cyber Court.

Shawn Callies of Callies Homes in Howard plans to build 15 homes per year for the next three years in the Cyber Estates development. If all goes as planned, his company will begin work on three single-family homes and two twin homes yet this year.

"Madison needs to see homes in the $250,000 to $300,000 market," Callies said, indicating the new single-family homes will all be priced under $300,000.

Although based in Howard, many of the new homes he has built are in the Sioux Falls area. However, he has built three in the Madison area, including the spec house in the Gulbranson development.

Callies learned there how the Madison market differs from the Sioux Falls market. While he was able to sell the house about a month after finishing construction, the selling price was $100,000 less than the same house would have brought in Sioux Falls.

One of the challenges that potential buyers faced when looking at the 3,700-square-foot house was financing. The house would have sold for $575,000 in the Sioux Falls area but was appraised at $410,000 in Madison.

Callies explained, "Madison has no comparable sale in that market."

In developing Cyber Estates, Kelly Nielsen indicated in an interview last August that he is hoping to address the identified need in Madison for price point housing, what was previously known as affordable housing. At that time, his plan included fourplexes, twin homes and single-family dwellings.

A sales flyer being distributed shows that plan has been modified. Twin homes will be constructed north of N.E. 11th Street instead of fourplexes. Other than that, plans have not changed since being presented to community officials last year.

The flyer indicates lots vary in price depending upon their size and location. Lots for twin homes are priced between $44,000 and $54,000. Lots for price point housing run between $28,000 and $36,000. Other lots for single-family homes will run between $40,000 and $46,000.

Nielsen Construction has been working with the city throughout the summer to build the development's infrastructure. Colleen Elcock, speaking on behalf of Nielsen Construction, said some lots will be ready by September and construction will begin this fall.

"We will have some partners in the Madison community that will be building, and we will have specs going in within the next six months," she indicated via email.

She also indicated Nielsen Construction has received several calls for lots, and "quite a bit of interest" has been shown in Cyber Estates. Lots will be available for sale as soon as subcontractors have completed work on the development's infrastructure.

"We are so excited to be building in Madison, and we are looking forward to being part of this growing community," she said. She noted the name of the development was inspired by Dakota State University and the Beacom College of Computer and Cyber Sciences.

"There is a need for new construction in the Madison community, and we can provide this opportunity for young families moving to the area or local residents looking for a new construction option," Elcock concluded.

Those not interested in homeownership at this time will also have new options, although only one is completed at the time. Brian Kern has expanded Lake Area Townhomes with a new building designed both to meet the need for one-bedroom apartments and to provide a spacious single-floor option for those seeking an upscale apartment.

"It's a little different concept," he indicated. "The first 56 were upstairs and downstairs."

With the new building, cozy one-bedroom loft apartments are built over spacious, 1,500-square-foot, two-bedroom apartments. Each of the two-bedroom apartments has an open floor plan, semi-enclosed patio and attached garage. Loft apartments feature balconies in addition to a compact washer/dryer combination, not a common feature in many older apartments.

Kern said he recognized the need to expand because more than 90% of the previously constructed townhomes were filled. In addition, experience indicated a need for one-bedroom apartments.

"The first ones to actually rent were the one-bedroom units," he said.

While some finish work is still being done, some units are completed and ready to rent, Kern indicated. Of the 21 in the new building, seven have already been reserved for occupancy.

Dusten Hendrickson of Brookings Built Green said the project on N. Egan Avenue which has been at a standstill for months is now back on track. He indicated that earlier this year "the investors hijacked the project." His company has now bought out the investors and work is resuming.

"We're hoping to have students -- or whoever -- in the south building for the second semester," he said.

Hendrickson said the pet-friendly units are designed for what he calls "New Age students." Each bedroom will have a private bath and space for a mini-fridge and microwave. Six bedrooms will form a unit in which there will be a common space that includes a kitchen and laundry facilities.

"It's kind of like a luxury boarding house," he said.

The second building is scheduled for completion by February. The complex will include four units.

Randy Hanson of Mills Construction in Brookings has plans to build Silver Creek Apartments off S.E. 8th Street, behind Ace Hardware, but is waiting to break ground until spring. The 24-unit complex will include a mix of one- and two-bedroom apartments, each of which will have a garage, although not all will be attached.

"There were a lot of uncertainties and we didn't need the project," he said explaining the delay.

Among the uncertainties he identified were price increases to wood and commodities, in part due to the COVID-19 pandemic. Supply doesn't keep up with demand, not only due to supply chain issues but also because folks are working on home improvement projects, according to Hanson.

Another uncertainty is related to the lack of clarity regarding how universities will be affected by the pandemic. The student population in Madison does affect the community's need for housing.

Hanson is not discouraged by the delay, though.

"We're excited to build in Madison. We think it's a great opportunity," he said.