The Enid News and Eagle, Enid, OK

January 9, 2013

2012: Commercial construction up, residential down

By James Neal, Staff Writer
Enid News and Eagle

ENID, Okla. — Commercial construction in Enid outpaced five-year trends in 2012, while residential construction declined to a five-year low.

A city of Enid report of 2012 building permits reflects less than $9.8 million in permits last year for residential construction and remodeling in the city, down 23 percent from 2011 and 37 percent below the five-year average.

Single-family home permits were a bright spot in the 2012 totals, rebounding from a five-year low of $4.5 million in 2011 to $7.5 million in 2012. The city issued permits for 27 new single-family homes in 2012, up from just 19 in 2011.

While single-family home starts still remained 28 percent below the five-year average in 2012, local builders and Realtors have hope for a continued recovery from the 2011 slump.

David Ritchie, a board member for Enid Metro Association of Realtors and Enid Homebuilders Association and owner of Chisholm Creek Development, said new home construction in 2011 suffered due to fears surrounding the departure of Continental Resources and its 263 employees.

Continental announced its move to Oklahoma City in March 2011. Ritchie said the effect in new housing construction was immediate.

“From the time Continental announced they were leaving, everyone immediately thought the end of the world was going to come,” Ritchie said. “It had the same effect as when they start talking about base closures — everyone just goes into retreat mode. That’s like applying the brakes to home construction, and everything just skids to a halt. That’s what the Continental deal did as far as building single-family homes in Enid.”

Ritchie said a predicted excess of homes on the Enid market never materialized after the Continental move, but new housing starts still have taken time to resume normal levels.

“There were so many rumors running around about how many homes were going to be on the market after Continental left, but those have all been absorbed,” Ritchie said. “Right now, we have a tremendous housing shortage in Enid, but new construction has still been slow.”

He said the recovery has been particularly slow for “spec homes,” or homes built on the speculation they’ll be purchased after construction.

“Since Continental’s announcement, there’s been almost no spec building — it’s been almost all custom — but hopefully that’s getting ready to come back,” Ritchie said. “It’s starting to get up and going again. There are several other builders who are bringing out new spec houses.”

Ritchie said about 10 new spec homes are expected to go on the market in Enid within the next 90-180 days.

Clark Edwards, owner of Edwards Custom Homes, currently has two spec homes under construction, with a third expected to start soon.

Edwards said builders have been cautious over the last two years, due to concerns over the economy and Continental’s departure.

“The last few years you’ve seen fewer spec builders out there willing to build, but for those who have done it, they’ve sold their houses,” Edwards said. “Sometimes there’s just a natural delay as far as new construction. Builders are pretty careful, because it is a large risk.”

He said confidence is returning to the local homebuilders’ market, and he expects 2013 to show continued increases in new housing starts in Enid.

“I think you’ll see a few more builders who used to do specs who will get back in it,” Edwards said. “There’s people moving into town, and people moving up, and as a builder I’m comfortable building houses.”

Aside from single-family home starts, Enid’s 2012 permits reflected strong performance in repairs, remodels and additions.

Permits for residential repairs, remodels and additions totaled more than $1.5 million in 2012, up 14 percent from the five-year average. Manufactured homes also showed strong growth in 2012, with permits issued for $114,520 of new construction — up 19 percent over the five-year average.

Permits for new garages, carports and residential storage sheds also met or exceeded five-year averages in 2012.

One shortage area in 2012 was in construction of new apartments. No permits were issued in 2012 for new apartments in the city, a sharp decline from 2011, when the $6 million, 102-unit Tuscana Apartments were built.

The 2012 residential figures do not account for the $3.65 million renovation of Clay Hall at Northern Oklahoma College. The historic dormitory building is being renovated by Construction Technologies LLC, and will become senior apartments after completion.

That project was classified under the city’s commercial permits, as a commercial repair, remodel or addition.

If the Clay Hall project were figured into the city’s residential apartment figures for 2012, those permits would exceed the five-year average.

While residential permits showed mixed performance in 2012, the city’s commercial construction continued to exceed the five-year average.

Commercial construction figures in Enid were skewed upward in 2011 and 2012 by new construction and remodeling projects for Enid Public Schools.

Enid voters approved a $99.4 million bond issue in 2010, yielding more than $44 million in new education construction and remodeling in 2011, and more than $6.8 million in work in 2012.

Enid’s commercial construction in 2012 still would have been strong, even if the education construction figures weren’t figured in to the total. Without the education construction and remodeling, Enid still issued more than $3.1 million worth of commercial building permits in 2012 — more than twice the 2008-2010 average.

New retail construction in 2012 was up 21 percent over 2011, and about even with the five-year average, while commercial remodeling, repairs and additions were up seven percent over the five-year average.

Enid Regional Development Alliance Executive Director Brent Kisling attributed the growth in commercial construction to a strong oil and natural gas industry, and unprecedented sales tax returns.

“A lot of that is being driven by the oil and natural gas industry,” Kisling said. “And, our sales were almost $100 million more than 2011, and 2011 was a record year. We are in uncharted territory in terms of wealth circulation in this community.”

Kisling said the strong sales are attracting new business construction, and driving existing businesses to expand floor space.

Main Street Enid program manager Kelly Tompkins said strong commercial sales and construction led to more than $7.3 million in private reinvestment in downtown in 2012, in building purchases, renovations and repairs. That total drove downtown to more than $32.8 million in private reinvestment since Main Street Enid was founded in 1984.

Tompkins said more than 22 percent of the private reinvestment made in downtown over the last 28 years occurred in 2012.

Sixteen new businesses opened or relocated downtown during 2012, and Tompkins said several more already are planned to open in 2013.

Tompkins said private commercial investment downtown likely will remain strong in 2013, spurred by optimism about downtown development and Enid’s overall economy.

“People are excited about being downtown,” she said, “and there’s a lot more happening downtown.”