Just off of Mendenhall Loop Road — nestled between the Juneau School District Parking bus storage lot, Auke Bay Elementary School and the Squires Rest parking lot — sits an empty dirt lot. It’s easy to drive past the barren piece of land without even noticing it. This won’t be the case for long.
The City and Borough of Juneau Planning Commission recently approved a conditional use permit for a 60-unit condo development to be built in this unassuming lot overlooking Auke Bay. Though these condos are still in the permitting process, they serve as a hopeful sign arriving at the tail end of a slow development year.
“I think this helps,” said Eric Feldt, a planner with the Community Development Department. “If developer A is doing nothing and then sees developer B building 60 units, they may want to kick something off.”
And the problem is that the development community was not “kicking things off” in 2015 to the same extent that it was in the two years before. Feldt knows this because he recently finished putting together the department’s development summary of commercial and residential growth from 2015.
The summary, a compilation of permit data, shows how many dwelling units were added (or are in the process of being added) to Juneau’s housing market in the past five years. As it turns out, there were fewer units added to the market in 2015 than in 2013 or in 2014. Last year developers added 137 units to the market. This was certainly a down year compared to the 220 units added in 2014 — the peak of development in the past five years. But it was still better than both 2011 and 2012, which added 60 and 69 units to the market, respectively.
“When we see a lot of one type of development or another, we want to know why,” said Brynwynne Grigg, and administrative officer for the CDD. Though the department has only begun analyzing Feldt’s data, this will be important to figure out.
This is at least in part because last year marked a departure from the typical distribution of development types. The CDD sorts all residential development into one of four categories: Single-family detached homes; common-wall and duplex units; three-to-four family units; and multifamily units. In this case, “multifamily” is a catch-all category that comprises apartment complexes, condos and any other such development.
Multifamily morass
The reason why the number of dwelling units dropped off in 2015 is because the development of multifamily units slowed to a four-year low last year. Multifamily units normally make up the majority of the total dwelling units added in any given year, so any fluctuation in multifamily development is usually reflected in number of dwelling units created, Feldt said. This has certainly been the case in recent years.
“Of the 220 new dwelling units in 2014, we know that a large majority of that number came from multifamily housing — almost 60 percent,” he said.
The CDD only issued 17 building permits for developments of this type in 2015, a sharp decline from the 137 permits issued for multifamily units in 2014. It’s worth noting, though, that 2014, too, was an outlier. The CDD issued 24 building permits for multifamily units in 2012 and 49 in permits 2013.
The number of three-to-four family units also fell off between 2014 and 2015, but the number of permits issued for developments of this variety — four permits in 2015, 15 the year before — were considerably lower than any other category. Therefore they didn’t contribute to the dip in total number of dwelling units created as heavily as the decrease in multifamily permits.
According to Grigg, this is likely because there aren’t many developers in Juneau who can take on large, multifamily projects, and it takes time to prepare in between projects. Feldt, too, has noticed this.
“Developers begin with a concept,” he said. “For it to come to fruition, they have to get all of their checks in a row, all of their financing in a row, and then boom: it’s a year or two later when their permits are issued.”
For this reason, Feldt thinks most of the permits that were issued in 2013 were for projects conceived in 2012 or perhaps a little earlier. There is a slight lag between conceptualizing a development and getting a building permit, and the larger the project, the longer the lag. This makes it difficult for CDD staff to forecast accurately how many building permits will be issued in any given year based on the number of permits issued in years prior.
Not all bad news
Though the total number of dwelling units created last year was smaller than in either of the two years preceding it, 2015 was not a bad year across the board for residential development.
The CDD issued 60 permits for single-family detached homes in 2015, making it the best year since 2011 for this type of development. Last year was also the best year since 2011 for common-walls and duplexes. The CDD issued 21 building permits for these developments, which have been trending upward for the past four years. And this is worth some celebration, according to Feldt.
“I’m glad to see these numbers high because this is kind of the American dream,” he said. “This is what we buy into. But does that market capture the demand or density of the demographic seeking that type of type of housing? That’s the big question.”
And the answer is no if you ask Assembly member and Juneau real estate agent Debbie White. The housing market is currently the tightest for young, working people and older people who are entering retirement, she said. When White looks for homes for these people, she is typically looking in the $300,000 range. The problem is there aren’t a lot of options for that price.
“Right now out of the 50 single-family houses on the market, only four of them are under $300,000,” White said. “Houses are too expensive for young people to buy. When half of the single-family homes on the market are over $400,000, that’s not a good market.”
White, Feldt and Grigg are all in agreement that increasing the total number of dwelling units available will at least begin to ease Juneau’s stuck market. And Grigg is hopeful that 2016 will be a good year.
“It seems like a lot of developers here have plans for this year, and they’re looking to act on them,” she said, and she knows this because she keeps a list of potential upcoming developments. Before filing for permits, developers usually give a heads up to the CDD, and Grigg keeps a record. Though she wouldn’t name any of the projects specifically, she said that all of the projects on her list would add a total of 200 dwelling units in 2016, most of which are multifamily housing. And that’s not counting the 60-unit condos approved in Auke Bay.
White is more skeptical of the market, fearing the state’s looming budget crisis may impact some developers’ plans.
“I always say my crystal ball is cloudy, but this time it got knocked off its stand, rolled off the shelf and broke,” she said, somewhat jokingly. “My crystal ball don’t work no more.”
• Contact reporter Sam DeGrave at 523-2279 or sam.degrave@juneauempire.com.
