Development nearly halved from 2007 to 2009 in Grand Junction
Grace Homes Real Estate and Construction owner Terry Lawrence received this advice at a national conference of developers last year: Find something else to do for the next three to five years.
It’s advice many commercial and residential developers may be tempted to heed. Some already have. In 2009, 223 fewer building permits were issued by the city of Grand Junction than in the previous year. The tally dropped by 518 permits between 2007 and 2009, from 1,329 to 811. Building permits, housing clearances and development-activity instances went from 2,382 in 2007 to 1,336 in 2009, a decrease of 44 percent.
Grace Homes is one of the many construction and development companies in town that didn’t need as many permits in 2009. The company sold about 67 new homes and 10 lots in 2009, which was 35 to 40 percent of the company’s sales in 2008.
Developers weren’t as concerned with finding buyers as they were with finding loans, Lawrence said. A year ago, Lawrence had nine banks offering money for his building projects. Today, he said, he has one bank’s backing. Two banks even pulled money while he was working on projects in 2009.
“I know of at least 12 projects and developers that have gone bankrupt in the past year just in Mesa County,” Lawrence said. “A lot of it’s loans.”
Grand Junction developer Mac Cunningham said “short of a house or two here or there,” developers are having a tough time securing loans, something that was true all last year.
“It’s virtually impossible to find money,” he said.
The health of a bank, the amount of inventory, good or bad, that it’s responsible for and strict regulations can hold lenders back from offering money, Lawrence said. Cunningham said the regulations are “an overreaction” that could hold development in the Grand Valley back for another five years, maybe a decade.
“Until the regulators allow them to lend and they’re able to clean up what’s on their plates now, you can guess they aren’t going to have a significant appetite for new things,” Cunningham said.
Some construction managed to eke through last year, including the Hooters restaurant at 2880 North Ave. The restaurant is part of a multi-lot commercial development called The Plaza on North Avenue.
Developer William Shuman said the development began in a dramatically different climate than the one that exists now.
“Money’s tight everywhere,” he said. “You have to show now (that) your tenant can make the payment to you, so you can pay the bank.”
City Public Works and Planning Manager Tim Moore said he hopes development activity this year will pull out of 2009’s tailspin with the help of new stores such as Cabela’s and American Furniture Warehouse moving to Grand Junction.
New stores show companies considering a move to the area that Grand Junction is a regional hub ready for development, Moore said.
In the meantime, the city’s planning department has cut its staff by 10 percent because of the lower volume of permit applications. Moore predicts permit activity in 2010 will remain about the same as 2009.