Housing Shortage in Northern Michigan Drives Conversion of Vacation Homes into Extended-stay Residences

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Strong job growth in northern Michigan propelled by major investments in energy, manufacturing, and resort projects have contributed to a new real estate trend: the conversion of vacation properties into extended-stay residences for new workers and their families.

“We’ve never seen anything like it,” says Sandy Mattingly, associate broker at Vacation Rentals and Real Estate in Gaylord. “There’s a housing shortage in northern Michigan and you’re seeing rental vacation homes being made available to new workers. It will take some time for home developers to catch up with the demand for new housing.”

Over the last year, several new projects have been announced in northern Michigan, including a $200 million natural gas facility, Wolverine Power Cooperative’s Alpine Power Plant in Elmira Township, and a new $125-million foundry by EJ (formerly East Jordan Iron Works) for 350 workers in Warner Township. Both projects are projected to be completed by the end of the year.

The latter company’s longtime operation near downtown East Jordan, which serves the marine, forestry, railroad, and agricultural markets and is best known for producing manhole covers, will be torn down. No plans for redeveloping the property, which includes significant frontage on Lake Charlevoix, have been announced.

In turn, Arauco North America is building a $400 million particleboard plant in Grayling, one of the largest such facilities in the world. The plant for 250 workers will service the Midwest and open later this year. Plans call for adding a neighboring furniture plant in the near future.

Otsego Memorial Hospital in Gaylord, now part of Traverse City-based Munson Healthcare eight-hospital network, is nearing completion of a $13.1-million investment to renovate and expand its emergency department, surgical services, and ambulatory care areas. The additions will include the integration of new technology and more private areas for patients.

“What you’re seeing in and around Gaylord and around northern Michigan in terms of new development and renovated properties is unprecedented in recent memory,” says Paul Beachnau, executive director of the Gaylord Area Convention and Tourism Bureau. “In addition, many of the area resorts are undertaking major upgrades, which will bring in more tourism dollars.”

In addition to adding two hotels, the 83-room Fairfield Inn and the 87-room Holiday Inn Express, for a total of 1,300 hotel rooms in and around Gaylord, the downtown district has invested $3 million in new streets, landscaping, and larger sidewalks. Several new restaurants have opened in recent months as part of the redevelopment effort.

Nearby, Treetops Resorts has completed $4.5 million in improvements, including the renovation of all 240 rooms, new roofs, new heating and cooling equipment, along with upgrades to the public areas and restaurants. Offering four 18-hole golf courses and the nine-hole “Threetops,” the resort is projected to record upwards of 200,000 rounds of golf this year. It also offers 23 ski runs.

“We’re off to a little later start to the golf season due to the cold weather, but we have a busy summer planned and we hope the good weather extends further into the fall season,” says Barry Owens, general manager of Treetops Resorts. “The expansion of Cherry Capital Airport (in Traverse City) and the addition of more nonstop flights from Texas, Atlanta, the East Coast, and other areas is driving a lot of new business to northern Michigan.”

More coverage about the expansion of northern Michigan can be found in the May/June issue of DBusiness magazine, now available on newsstands.

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