Friday, Feb. 22, 2013
Leonard Hall - Olathe data shows real estate recovery
By LEONARD HALL
Special to The Star
The Olathe planning department’s latest annual review shows that the city is coming out of a five-year major recession in residential construction, but not in commercial or industrial building.
And 2013 is looking to be a better year for residential, commercial and industrial developments in Olathe.
From 1991 to 2008, Olathe was one of the fastest growing cities in the Midwest, but it was a slow-growing city from 2008 to 2012.
Olathe issued 424 building permits for new single-family residences in 2012. The average from 2008 to 2011 was 300 permits. From 1991 to 2007, the range of 700 to 1,500 permits per year was the norm. I would not be surprised to see at least 500 permits issued this year.
Officials approved more new subdivisions in 2012, while very few won approval from 2008 to 2011. In 2008, there were around 60 single-family residential subdivisions and approximately 1,800 empty lots. In 2012, several subdivisions were filling up.
The residential real estate recession is ending as property from a three-month supply of used single-family houses are selling at a faster rate, and valuations are increasing.
The only negative residential news was that there are still approximately 150 mortgage foreclosure cases being filed every month in Johnson County.
Why is the number of permits for single-family residence important to Olathe? It was the high number of permits for single-family units from 1985 to 2007 that allowed new shopping centers, commercial and industrial developments to be built as the city kept up with its growing population.
For 2013, Olathe senior planner Charisse Deschenes said a 76,000-square foot Hy-Vee grocery store now being considered for 151st and Black Bob. There are plans approved for a 38,780-square-foot Whole Foods Market and attached retail buildings at 119th and Black Bob, and a 41,179-square-foot Wal-Mart neighborhood store near 151st Street and Ridgeview following the new growth in single family developments.
In comparison, Olathe has averaged approximately 1 million square feet of commercial/industrial/office developments — the size of Oak Park Mall — nearly every year from 1991 to 2007.
In 2012, the city issued nine building permits for commercial developments, totaling 179,000 square feet. Compare that to the average of only 70,000 square feet per year from 2009 to 2011. Olathe still has a high vacancy rate of commercial and industrial buildings.
In 2012, Olathe issued four building permits were issued for industrial development for a total of 1,275,497 square feet, mostly for large warehouses. From 2009 to 2011, the city issued permits for only two industrial developments.
The only bad news from last year’s non-residential numbers was in office developments, where only one permit for a small office was issued. The city issued three permits for 214,345 square feet in 2010 and three permits for 56,883 square feet in 2011. Office developments bring many jobs to Olathe.
Financing is still a major problem for all developers, especially in commercial and industrial projects, as most of the financing for those categories of development from 2001 to 2007 came from local banks. In 2010, a developer said that 21 out of 22 local banks lending real estate loans were no longer in the business.
The real estate recession for industrial and commercial development will continue. There is a small light at the end of 2013 for a recovery.