jackson

Justin Jackson will build townhomes and eight-plexes on this property near Wickersham health campus. Photo by Pat Christman

Justin Jackson started in business with a small rental property and managing other properties before getting into the development side, including townhomes at Hiniker Pond and in Eagle Lake.

He recently purchased land near the Wickersham clinic campus where he will start building twin homes and eight-plexes next spring.

Jackson, who's seen his development business steadily grow over the years, is bullish on the continued growth in the area.

“I’m happy with the way the city EDA and local commercial Realtors and the business leaders are bringing people to the city because that’s a driver for housing.”

In the past year the pace of multi-family housing construction has continued strong and single family-construction also has stayed fairly steady. It’s a trend local developers and city leaders expect will continue this year.

Mankato City Manager Pat Hentges expects that population growth to continue, pointing to a recent study commissioned by the school district to gauge future growth.

“Within the district boundaries it shows there will be continued growth of families with school-age kids in a lot of the Mankato and Eagle Lake areas. A lot of that is there’s more multi-family housing being built that is attractive to young families,” Hentges said.

“Single-family housing isn’t the only form of housing that’s attractive.”

drummer

Developer Mike Drummer at a building site near Prairie Winds Middle School. Photo by Pat Christman

The area’s biggest local developer, Mike Drummer, has been surprised at the strength of the multi-family housing market in recent years.

“I don’t see the end of it. With interest rates going up, that knocks people out of buying homes so I think the rental market is going to stay strong. We’re adding population to our area and they will be living in rentals,” Drummer said.

Jon Kietzer, owner of Century 21 Landmark Realty, said the sale of existing commercial properties in the area remains fairly strong, although a glut of empty big-box store buildings is an issue that will be tough to work through.

“Mankato’s economy is pretty positive. There are some soft spots but overall it’s pretty positive.”

A rough season

While the demand for housing may be strong, the weather during the past construction season was not kind.

“It was a terrible season. It was totally weather-based, not economic-based or any other factor,” Drummer said of the heavy and frequent rains that shut down and delayed projects everywhere.

“It trickled down to everyone else. If you’re a plumber, they get held up and everyone else does, too.”

He had a street near Prairie Winds Middle School that he wanted to have paved by last fall, but it was filled with water and will have to wait until this year to be finished. “There was 4 feet of water over it. I actually have a photo of fish that were in it after we pumped it out.”

Weather aside, Drummer is continuing to build apartments, senior-living units and single-family homes on part of the land near the school. Another developer bought land from Drummer and is working on a commercial development in the area behind Kohl’s. And a developer is building housing on part of the large tract of land near the new school.

“The senior market really picked up. It came back strong after the recession and hasn’t slowed at all,” Drummer said. “If you have more seniors move, you have starter homes become available for another generation to slide into.”

He says that as interest rates rose the market has softened for spec homes – homes developers build without a specific buyer lined up.

“But for people with blueprints who wanted to build, that’s been the best ever.”

Jackson, whose new subdivision is next to the Knollwood Park mobile home park near Wickersham, is focusing his efforts on apartments and townhomes.

“We follow the trend of what’s in demand. We’ll do 20 twin homes and eight eight-plexes. We’ll phase them in as the market allows,” he said.

“I think everybody eventually wants a single-family home. We offer that transitional housing until they have the right income situation to move into a house.”

Fewer lots

Drummer said that by 2020 he and the other developer will likely have most of the land around Prairie Winds filled in. That, along with housing developments going up farther north along Highway 22, will eat up most of the available ready-to-build lots.

“In Mankato we’re pretty much out of lots. I think it’s the lowest inventor of lots I’ve seen in 25 years.”

Hentges agrees the number of available lots are starting to diminish.

“Generally speaking most of the existing subdivisions are built out. We easily absorb about 100 lots for single-family homes each year. So ideally you need maybe 200 lots ready to develop at any time.”

He said it will take developers to purchase land and start new subdivisions to add more lots.

Hentges said that while it’s the private developers who purchase the land and pay for a lot of the improvements, the city is closely involved.

“It’s a private market but every subdivision involves city financing and facilitation.”

While there is still a lot of open land between Mankato and Eagle Lake, Drummer said Mankato’s geography offers some limits to future developments.

“We’re land locked by a river and by an airport flyway to the north and lots of swamps to the south and the east," he said.

Hentges said in spite of some softness in certain markets and a housing slowdown in many parts of the state and country, Mankato looks fairly solid moving forward.

He said building permits for residential construction and remodeling are holding fairly steady.

“There are fewer single-family and townhomes and slightly more apartments. I’d like to see more single-family and more lots,” Hentges said.

Commercial mixed

Hentges said the big industrial project this year is the expansion of Johnson Worldwide’s production and storage facility on the east side of the city.

“That’s a big project. For industrial, if we continue to have one large industrial project a year, we’d be doing great for Greater Minnesota.”

While industrial development has been decent, the amount of empty retail space in the city is a concern.

“Obviously the big-box vacancies are another issue,” Hentges said. "That’s resetting the market.”

In recent years Sears and Herberger's left River Hills Mall, Gander Mountain and Gordman’s closed, and Lowe’s announced late last year it was closing.

“A significant amount of our growth 10 years ago was big boxes coming in. I was amazed that they kept coming,” Hentges said. “There was perhaps overbuilding.”

Reusing all those empty big boxes will take some creativity said Hentges and the developers.

“Those big spaces aren’t readily adaptable to something else than what they set out to be,” Hentges said.

Follow Tim Krohn on Twitter @TimKrohn

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