Archive for Wednesday, June 23, 2004

Cost of construction rising in area

Supermarket plans on hold between Tonganoxie and Basehor

June 23, 2004

For area home builders, the outlook is good, and bad, at the same time.

"Right now if you can survive, you can make it," said Tonganoxie builder Curtis Oroke.

Oroke, and other area builders are concerned about the cost of building supplies.

Sam Wiles noted the increase in the cost of OSB panels -- the wooden composite sheets used on the exteriors of homes or for flooring -- have gone through the roof.

"From January 1 to today, OSB has gone from about $9 to about $18," Wiles said last Thursday. "And that's just one product. Everything else has followed right in suit -- electrical, plumbing, concrete, steel and drywall."

Sometimes the increased costs can be passed on to buyers.

"You've got no choice," Wiles said. "All we can do is increase the costs of the houses due to the increases we're getting hit with."

And sometimes they can't -- for instance on a custom house with a contracted price.

"I've been doing five or six customs," Oroke said. "You take 20 percent on each house and it doesn't take long, there's quite a bit of money that you lose. You just grin and bear it but it's hard to make that money back up."

Oroke said he's down about $52,000 because of this.

That's why he's starting to insert a clause into contracts that will cover increases in building supply costs.

Accessibility in mind

In Tonganoxie, Wiles stumbled on a popular trend in housing -- handicapped-accessible ranches.

The houses, which now are selling at around $185,000, have about 1,700 square feet of living space, a two-car garage and a basement.

"They're a hot item for people in their upper 50s and up," Wiles said. "They don't have the stairs, they have wide doorways, there's no step up out of the garage. There's just a lot of advantages for them."

And, he said, the homes have a pleasant open design, which is popular.

"It's been a good market for me," Wiles said. "I've built four of them since August."

All of these houses are in Tonganoxie's Stone Creek subdivision.

He learned how in demand they are when he built the first -- a custom house for a local couple.

"The last two weeks I had that first house I could have sold it six times," Wiles said.

And, he noted, the houses sell quickly.

"There's a growing market for them," Wiles said. "We're getting older. I get calls about these -- this house has a design that people are looking for."

Multipurpose development

Curtis Oroke is one of the developers working on Honeycreek Farms, a 72-acre subdivision at 166th Street and U.S. Highway 24-40.

Other developers on the project are Troy Letourneau, Dave Freeman and Roger Morningstar.

Earlier this spring they'd hoped the infrastructure work, done by Miles Construction, would be complete by now. But frequent rains have slowed the progress.

"We've probably lost three or four weeks, maybe even more than that," Oroke said.

The property includes 20 acres of commercial frontage along the highway. An investor has already purchased six of the commercial acres for about $1 million. Schmidt Lumber, a Topeka-based business, plans to open a new store in the fall.

While the men had hoped to entice a grocery store to move to their site, plans for that have stalled because the grocer wants to wait until more residents move to the area.

"Most of the businesses that we talked to, they want to see rooftops," Oroke said. "For any kind of retail they're looking at rooftops."

The next step at Honeycreek will be to work on that.

The land is designed for 67 family homes, 18 townhomes and 16 to 18 elderly living units.

The subdivision will require that single family homes be a minimum of 1,600 square feet.

But Oroke said they'll likely be a little larger than that. He believes the price range will run from $205,000 to $245,000.

Oroke plans to begin construction on houses as soon as infrastructure is complete.

As far as the residential part of Honeycreek, Oroke said original plans were to do it in phases.

"But when we got the contract for the million dollars (for the six acres of commercial property), we decided to go ahead and do all the phases," Oroke said.

He estimated the development will be completed in three to five years.

Underlying needs

While Tonganoxie area builders continue to have faith in the area's continued growth, they voice caution.

For one thing, there's more competition than there used to be.

"It's not as profitable as it was before," Oroke said. "There's going to be a lot of subdivisions coming on line all at once, so there's going to be a lot of competition out there."

Oroke and Wiles both mentioned that the war in Iraq appears to be playing a role in the rising cost of building materials.

And, Oroke said, world political events could have an effect on local development.

"If you've got your money invested and if all of a sudden we get another terrorism incident, you're going to see a scare big time," Oroke said. "It's a chance you take."

And, of course, there's the matter of the basic infrastructure needed to support the growth. Oroke pointed to the need for adequate water, sewer, roads and even school facilities.

"There's all this talk about bringing in the city and so forth," Oroke said. "What the question is going to be is how fast can they be ready for the upgrades they're going to have to do on their own systems."

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