As home prices in Lexington continue to rise, finding land to build new homes continues to compete with finding land for commercial development, planning officials say.
It’s an age-old conundrum but one that could see changes as Lexington begins the process of developing its comprehensive plan in the coming months.
“When you’re looking at use of land, it’s always a balance between housing stock and where people get jobs,” said Kevin Atkins, Lexington’s chief development officer.
Land use in Lexington is determined by the city’s comprehensive plan, which is set every five years. The last comprehensive plan took place in 2018, meaning the next one will take place in 2023. Work on the next comprehensive plan will begin this year, he said.
One of the key elements of the plan is the Urban Service Boundary. Passed in 1958, the Urban Service Boundary delineates where new development can occur and sets strict minimum area requirements as a way to control urban sprawl and maintain the city’s urban/rural mix.
But with available land at a premium, finding the right mix between housing and commercial uses as the city grows, while sticking to the comprehensive plan, will be tricky, said Craig Bencz, administrative officer in Atkins’ office.
“We will need to use some creative planning tool to maintain that growth,” he said. “There is a way to accommodate growth, but it will rely on a lot of policy discussions in order to manage it.”
According to the Lexington Sustainable Growth Study, a study done as part of the 2018 Comprehensive Plan to inventory available land and explore existing conditions within the USB, as well as look at the current and future economic and population trends, the city faces growth in not only its population but also its need for commercial space.
Projections indicate that Fayette County will grow between 29,700 and 41,200 households by 2040. The city will see demand for new office space increase to between 2.5 million square feet and 4.6 million square feet by 2040.
“The Lexington office market has demonstrated itself to be a stable market, with less speculative development occurring than in the larger office markets in Louisville and Northern Kentucky, resulting in comparatively low vacancy rates,” researchers wrote in the study.
The growth in households is stymied by the lack of growth in housing, said David O’Neill, property valuation administrator with Fayette County.
“We’re seeing significant increases in the sale prices of homes,” O’Neill said. “The median price of a single-family house right now is $250,000. Our greatest need is for housing and affordable housing … we are building [almost no] starter homes in Lexington right now.”
But development on multi-unit housing is often met with pushback, he said. Concerns from neighborhood associations over property values, traffic and other issues often block developments.
“Almost without exception, every townhouse development is met with pushback,” he said. “It seems for neighborhood associations, the default position on these developments is going to be no.”
The city needs significant investments in condos and townhouses, he said, as attractive alternatives for traditional single-family homes. But, fighting to get those multi-unit dwellings approved only serves to drive up the cost, he said.
“Developers face significant hurdles in getting those projects approved,” he said. “And there are costs associated with those fights, like hiring attorneys. There’s significant expense attached to the process.”
Housing growth can lead to job growth, he said.
“For a vibrant city and community, you need controlled growth to attract employers. Well-managed growth is attractive for the city.”
“For a vibrant city and community, you need controlled growth to attract employers,” O’Neill said. “Well-managed growth is attractive for the city.”
The area is growing commercially as well, Atkins said.
“We continue to get quite a bit of interest from companies coming out of COVID,” he said. “Land is available to companies. It’s how they use the land that’s the issue.”
The COVID-19 pandemic has had a significant impact on how land will be used, Atkins said.
Changes in how people shop has changed the need for retail land use. Atkins pointed to a new Amazon development as evidence of that. Located on 45-acres that used to be part of the Lexmark campus, the facility provides last-mile service, as well as serves as a service center for the company’s electric car fleet. As consumers switch to online shopping, warehouses and delivery centers such as that one are more needed than retail space, he said.
The issue facing Lexington, said Gina Greathouse, executive vice president of economic development with Commerce Lexington, is the shortage of land for commercial use.
“There are very few sites that are available for light industrial,” Greathouse said. “I market the region, and not just Lexington. There are lots of projects that will go to the surrounding counties.”
A land swap between the city and the University of Kentucky would open up 200 acres of land for development, Greathouse said, but to make it usable, the city would have to put in the infrastructure necessary to attract businesses. Greathouse estimated the land in Coldstream Park, off Georgetown Road near interstates 64 and 75, would not be ready for commercial use for another three years.
“I think it will make a big difference, once that land is ready,” she said. “Bringing in light industrial businesses will bring in jobs. Currently, businesses are looking outside of Lexington to locate to.”