WICHITA — Developer Jason Van Sickle is moving ahead with plans for more apartment communities now that his $20 million Chisholm Lake Apartments at K-96 and Oliver has opened, but his new apartments won’t be what he originally planned.
“My plan was to take that model – nicer, upscale apartments – and do them in other cities,” Van Sickle says. He says he “was successful at getting about a dozen projects in our pipeline.”
He was considering markets such as Tulsa and Kansas City.
“But I saw in these markets there was a flood of people coming in to do apartments,” he says.
As he started studying economic development, Van Sickle says he discovered a new opportunity.
“I realized small towns have a huge and desperate need … for housing, especially apartments,” Van Sickle says. “We’ve got nine cities where we’re really making a push.”
In Newton, Valley Center, Derby, Haysville, Rose Hill and Wellington, he’s working with landowners and is proceeding with financing and rezoning.
“We’re also working with the cities of Hutchinson, Bel Aire and El Dorado right now to do some site selection work.”
Van Sickle considered about 200 towns around the state then narrowed his list to 50.
“I just started picking up the phone and calling,” he says of city managers and others.
He now predicts that in the next five years, he and a variety of partners will do $700 million in apartment development in smaller communities.
“They desperately could benefit from our model,” Van Sickle says.
He says his model is different than other small-town apartment models.
“Low-income housing is what’s been built,” he says. “In the real estate development world, that’s been the game. … I didn’t want to do low-income housing,”
He says his J. Van Sickle & Co. – which a year ago was a one-man shop and now has 11 employees – spent a year and a quarter million dollars to develop a workable prototype for high-quality, market-rate apartments.
Van Sickle hired an in-house architect and has been working with contractors and engineering firms on the model.
“The reason it’s hard in small towns is their rents are 30 percent lower than in cities like Wichita, and their construction costs are 10 to 20 percent higher,” he says. “You’re going to pay more to build something in a small town.”
Van Sickle says he had to figure a way around that.
“It’s very hard to figure out how. We did.”
His plan involves first finding a land owner to invest land for ownership in the apartments.
“That brings down a considerable amount of cost,” Van Sickle says. “That gets us almost to the finish line, but not quite.”
He also had to start his own management company.
“Apartment management is expensive.”
Usually, that takes 35 percent of an apartment owner’s income.
“That takes a bunch of money right off the top,” Van Sickle says.
“By redoing the management model, we found a way to squeeze that down to 25 percent.”
Van Sickle says he’ll have quite a few partners for each development, and they won’t necessarily be the same ones.
“Everyone involved in development, from the contractors to the engineers, are investing their fees for ownership.”
A typical development team will have a land owner, a contractor, an architectural firm, a civil engineering firm, a mechanical engineering firm and a structural engineering firm.
“That’s really the core ownership group,” Van Sickle says.
Banks and cash investors also will be involved. The investment group in each apartment could be one group, such as the group of landowners at K-96 and Oliver. Or, as is the case in Wellington, Van Sickle may raise money with $5,000 a person at a time from people in the communities where the apartments are being built.
“We really want to be a very entrepreneurial organization,” Van Sickle says.
A couple of Wichita entrepreneurs Van Sickle has worked with have influenced him.
“I learned a lot about innovation from Jack DeBoer,” he says.
Dave Burk has been a mentor as well.
“He goes around trying to find projects that really improve communities, and that’s what we’re doing,” Van Sickle says.
So far, he thinks it’s working.
“We’re growing tremendously fast.”