Written by ADAM BROWN
Friday, June 03, 2011
GUAM – With workforce housing plans approved for 6,900 temporary workers and more on the way, it's increasingly uncertain how the addition to the supply of buildings during the military buildup on Guam may affect the island real estate market – or whether it can lead to profit, according to The Real Estate Professionals.
"Figuring out what to do with the workforce housing will be a real challenge," Chris Murphy, Owner and Principal Broker of The Real Estate Professionals brokerage on Guam, told GuamBuildupNews.com. "Ultimately, most of the workers will leave. With workforce housing, you could be left sitting there with expensive property and nothing to do with it after the buildup."
On an island of 180,000 people that is already oversupplied with apartments, construction of units for 6,900 temporary workers has already been approved and the Guam Land Use Commission is still considering applications for housing for 6,400 more. The numbers don't include the massive Ukudu Workforce Village project by Younex Corporation initially designed for up to 18,000 workers.
The housing is meant to be used by the thousands of workers expected to arrive in coming years to help prepare Guam for the transfer no sooner than 2016 of at least 8,600 U.S. Marines and their families and support staff from Okinawa. The dwellings for the 10,000 or more workers, according to common estimates, may be left empty after the buildup, saturating the island with structures that might not be used for other purposes.
"The key idea to note on workforce housing is that it's temporary in nature and there to accommodate an upswing in the number of contractors and related workforce for the buildup," Murphy said. "Under normal conditions, there wouldn't be any reason to be out there looking to build more workforce housing."
"One option could be to use some of it as permanent, low-cost housing or for multiple family living that would accommodate lower income," Murphy said. That, though, would require more solid structures than traditionally used in workforce housing. "If metal is involved, the chances are the banks won't finance it."
"Turning them into retail facilities could be another option," Murphy said. "Right now, the commercial market is dragging as the economy is still down. There's a lot of office space out there. It would require additional businesses coming in. There may be other options. A few people are already out there looking for them."
One of those people is Guam landowner Cesar Cabot, who had workforce housing plans approved last month for 2,016 workers.
Mr. Cabot said workforce housing is only his "interim" or "transitory" purpose for the $25 million project at the intersection of Route 1 and Route 3 as he plans to turn it around after the buildup so it "can be used as apartments, condos or commercial buildings to support the private hospital that is coming up next door."
"The structures will be a mix of condo units and commercial building," Mr. Cabot said in an interview with GuamBuildupNews.com. "The condo units however are of flexible design to accommodate doctor offices or student classrooms, something to complement and support a private hospital."
Mr. Cabot's early planning has proven crucial when considering end options for workforce housing, not only in taking the planned hospital into account but by locking in raw materials.
"It's a way to build the units now before the prices for steel, concrete and labor become too astronomical," as the buildup gets underway and saps the island's resources.
GuamBuildupNews.com monitors the marketplace for real estate insights and opportunities related to the military buildup. In the coming weeks, the site will debut a new Guam Real Estate section dedicated to news and information that will help property owners, buyers, renters, investors, developers and realtors make better, timelier decisions.
- 09/09/2011 13:16 - Guam’s Largest Workforce Housing Complex Opens: Ukudu Workforce Village Remains Scalable as Military Buildup Stays Fluid
- 01/09/2011 08:38 - Despite Very Real Short Term Challenges, Experts Still See Growth for Guam Residential Real Estate in Long Run, Military Expansion Seen as Critical
- 12/07/2011 15:19 - Guam Real Estate Market Readies for ‘Virtually Guaranteed’ Growth Spurred by Military Buildup, Experts Say
- 23/05/2011 16:35 - Contractors Benefit From Opening Island Offices Before Prime Guam Real Estate Grows Scarce Amid Military Buildup
- 18/05/2011 16:03 - EXCLUSIVE NEWS ANALYSIS: Military Buildup to Raise Quality and Price of Guam Real Estate in Coming Years, Drive Some Old Homes Off Market
- 10/05/2011 13:41 - Betting on Guam Real Estate Amid Military Buildup Needs Strategy for ‘Rising Development Costs’ and ‘Staying Power’
- 05/05/2011 14:15 - Another 2,016 Workforce Housing Units for Guam Military Buildup Approved, Raises Total Supply to Over 6,900 – Excluding Younex’s 18,000 Unit 'Ukudu Village'; 6,400 More Units Still Pending Review
- 28/04/2011 17:20 - NEWS ANALYSIS: Amid Guam Military Buildup, Single-Family Homes Represent Safest Investment, According to Real Estate Professionals