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Heather Mosley | SBJ

Residents Move Out. Business, Retail, Jobs to Follow. (Sponsor Letter)

SBJ Economic Growth Survey: Workforce Development

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As a region, we are in great shape for housing and business development. For instance, Republic is booming with open developable land that the city is aggressively expanding infrastructure to in order to accommodate development projects. The city of Republic is also finding ways to speed up development time. The 1.3 million-square-foot Amazon warehouse in the Garton Business Park was constructed in less than a year. That did not happen without extraordinary efforts of all concerned. Time is as critical of a metric as the cost of land and building for developers. 

Springfield is not in the same position as Republic and other neighboring communities. In order to grow and thrive, the population within the city must also grow to maintain essentials like roads, sewers, schools and emergency services. Our current city residential population is roughly 170,000 with our daytime population increasing by nearly another 100,000 people. As a regional business, health care, education and retail hub, Springfield’s essential services and infrastructure must accommodate much more than its residents alone.

Right now with our housing growth limitations, we are setting ourselves up to force residential population growth to the outlying areas. There will be a tipping point when businesses, retail and jobs will follow the workforce, putting Springfield in economic decline.

Over the last two years of Economic Growth Survey forums, we have discussed how lack of developable land, cumbersome regulations and neighborhood resistance is hindering development. It is starting to have a very real impact on our workforce attraction and retention. Housing supply is not keeping pace with demand, rapidly inflating leasing and ownership costs for residents. We have known for some time that Springfield has a low-income housing issue. Now, those problems are creeping into middle-class income housing.

Last year in Springfield, the number of renters surpassed homeowners, representing 59% of residential properties in the city limits. In part, this is due to a shift in preference for mobility that leasing affords. However, the rising costs of homeownership are forcing some to rent.

Full disclosure: As a multifamily housing owner, I’m happy. This is great for me and others who already have rental units in the city. It also won’t surprise you to hear we are in the business of doing better than breaking even. With rising costs of land/property, design and materials, along with zoning and neighborhood negotiation time delays and subsequent redesigns, rental costs on new properties are high. The only way to cash flow a new multifamily project without financial incentives like tax abatements is to build high-end units. That’s why you are seeing so many luxury style apartment complexes for niche markets like 55-plus popping up. Demand is there, and supply is keeping pace.

However, we are falling woefully behind meeting the demand for low- and middle-income rental units. Developers cannot, and will not, bear the financial burden to meet the demand in Springfield. The costs and risks are too great.

Again, I am not worried about my business and I doubt other housing developers are either. Plenty of communities surrounding Springfield are anxious to seize the moment and are rolling out the red carpet to developers by eliminating barriers to entry and completion.

As business owners and residents of Springfield, we can see that this is leading to workforce flight out of the city. We know how important cost of living and wages are to our individual efforts to recruit employees. We also know that our quality and quantity of workers along with low cost of living are great incentives for new employers to locate here. All of this is eroding because of our relatively high housing costs.

Developers are sophisticated optimists taking calculated risks and adapting when necessary. I am certainly no exception. In 2014, I purchased my first property on Commercial Street. Seven years later, I now own 25. The neighborhood association is strong and takes extraordinary pride and ownership in their community. That is part of why I want to be a part of Commercial Street. Some property owners in the district have diligently worked decades to create the vibrant center for art, retail and dining. I believe it is the most unique area of our city.

While obtaining properties, we were simultaneously developing a master plan and designs for specific building development. This included a multifamily complex for which we hired architects. All designs went through the neighborhood association. Upon initial review, they required we add more parking. We went back to the drawing boards. To accommodate either a parking structure or underground parking the complex needed to be 400 units in order to cash flow. The neighborhood association did not like the scale of the project. We went back to the drawing boards. The complex is currently reduced to 150 units.

I share this story not to bemoan my situation. I want to see this project through, and I want to work with the neighborhood to maintain its atmosphere. My point is that I could have easily built a 400 unit in every surrounding community and already be at 90% capacity in each in the same amount of time, with lower upfront capital outlay, less difficulty and likely little to no compromise. Not all developers share my patience, motivation and loyalty to Springfield.

Embracing development and change is difficult, but it is necessary for Springfield’s long-term workforce development which is the single-greatest asset of our community.

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