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Boom at The Beach Continues

By H. Bradford Fish

April 10, 1982

Welcome to Boomtown, U.S.A. This seashore city of 5,000 is enjoying favorable winds of trade at a time when much of the county is floundering in a sea of economic woes. Currently, the unemployment rate in the construction industry is 20 percent, but in Ocean City, workers say it is easy to find jobs.

Lenders describe the strong real estate market here--part of a building boom in beach communities on the eastern seabord--as a by-product of the Washington area's affluence. Most of the buyers here, said Marshall W. Moore, a senior vice president for marketing and business development at Baltimore's Loyola Federal Savings and Loan Association, are from comparatively high-income brackets.

"Montgomery County has one of the highest per capita incomes in the country," he pointed out. "Northern Virginia is in that category. These are the people Realtors, as I understand it, cater to in Ocean City .”

"It has fine fishing, fine beaches, and the quality of construction has been high," he said. "Prices are competitive compared with Florida and California." Moreover, Moore said, many buyers are using cash or investment reserves to purchase vacation homes. "They see it as an investment where they gain appreciation and tax advantages." Plus, he said, "it is geographically available.”

Michael Sumichrast, chief economist for the National Association of Home Builders, says "the ocean-recreational market is the strongest market in the country." Typical buyers of Ocean City property are around 50 and have high incomes, while the average age of home buyers nationally is 32, he said.

Ocean City issued $54.7 million worth of building permits in 1981, 80 percent of them for condominiums, said city officials, who predict that this year will be even better. Permits for projects valued at $13.9 million have been approved in the first quarter, $3.3 million ahead of the 1981 pace.

Builders, real estate agents and city observers attribute the building boom to the hordes of beach nuts who flee Washington, Baltimore and Philadephia for the sun, the surf and the sea.

"I hear there's not another city in the country like it, not even Houston, Texas, with its oil wells," said 63-year-old Harry Kelley, the salty Ocean City mayor who is running for governor. "I'm signing plats right and left. It looks like we're going to do $60 million this year," he boasts. "We're hot.”

Vance Richardson, the editor of a local weekly newspaper, the Maryland Coast Press, often takes issue with the mayor's pronouncements, but not this time: "The building boom is in Ocean City," he says. "You won't find it throughout the country. . . . People's budgets might be trimmed a lot, but they'll still go on vacation. They can't afford Florida, the Bahamas or the West Coast, but they can afford a three-hour drive to Ocean City.”

All this is not to say that the Eastern Shore is a trouble-free zone. A sandwich-shop owner is worried about staying in business. Residents still complain about noisy tourists.Some rental property owners, citing the rowdy behavior of young renters over past summers, have asked the Maryland legislature for permission to turn away teen-agers.

"These people check their brains at the bridge and don't pick them up again until they leave town," Guy Ayres, an Ocean City attorney representing real estate owners, told the Associated Press recently.

In other troubles this year, six fires--allegedly the work of an arsonist--recently socked Ocean City in as many hours; local crabbers are again warring; old-timers are saddened by the disappearing marshland, and some are troubled by the constantly changing skyline and life styles.

But some long-time residents say they are willing to accept the inevitable growth here.

"You can't hold back progress," said William N. Grimes, 75, former city manager of Bethany Beach, the Delaware resort town eight miles north of here. He has lived for 12 years in what he calls "no-man's land," a sandy swath of the Delaware coast between Middlesex Beach and Bethany.

However, Grimes doesn't like the kind of progress that comes with liquor by the drink, now that a Bethany restaurant is applying for the city's first liquor license. "I personally will take a drink, but I'm willing to brown-bag it." That issue will be aired at a public hearing Thursday on the restaurant's request.

The next day, in Dover, the Delaware Supreme Court is scheduled to hear Green v. Freeman, a suit brought by William S. Green, a Washington lawyer who has a summer home in Bethany, and his wife, Tamara. The Greens have been fighting Carl M. Freeman Associates' plan to build a $36 million, 450-unit high-rise, Sea Colony North, on the north end of Bethany's shoreline. Freeman is appealing two lower court rulings that striped him of the zoning necessary for the project. The Greens and Freeman have been fighting this case in the state court system for eight years.

While Freeman calls the Greens' action a nuisance suit, Mrs. Green counters that they are sincere. "I know that if we don't have that seashore to give to our grandchildren we won't have anything," she said.

Meanwhile, houses, restaurants, stores and condominiums are going up all along the shoreline on both sides of the main drag, Rte. 1, as realty firms entreat in neon for properties to sell or rent: "List with us. We know the beach," reads the sign of Moore and Warfield Realtors. A freshly waxed, white Porsche tools around town with a Maryland tag that reads: Condo 1. A carwash reminds the city's 500 real estate agents that "you can't sell a house with a dirty car.”

Officially, Ocean City is billed as the "white marlin capital of the world." But the city's livelihood depends on much bigger game, namely the 5 to 6 million visitors who are expected to crash the shore this summer, leaving $400 million behind.

In June, July and August, the daily census swells to 225,000, including some who often pay dearly for a place to sleep. One night at the Sheraton can cost $110. A week at the Regency, in July, runs $700. For second-home buyers, luxury seaside condos can cost upwards of $150,000, or $250,000. More typical prices, however, run from about $57,000 to $89,000, available at 15 percent financing.

Whatever the cost, pre-season business is swift, said Marion Farmer, president of the Ocean City Board of Realtors. "Prices are up and rentals are running way ahead of last year ," she said. "We have 600 rental units at Holiday Real Estate , and we could use another 600 if the weather holds." Her company's motto: "Opening doors and closing sales."

Builders are hammering away, adding to the city's stock of single-family homes, town houses, apartments, condominiums, hotels, motels and cottages. Most new construction is rising from Ocean City's northern end, far from the older, more familiar clapboard hotels and bath houses that line the west side of the 50-year-old boardwalk.

On a recent day outside the office of Joseph Vignale Jr., the city's acting chief building inspector, a row of suntanned contractors waited 15-deep for building permits.

"It's been like that for 11 months," Vignale said, putting a strain on the office's three-person staff. In the first quarter of 1982, the city issued building permits for $13.9 million in construction, $3.3 million more than the first three months of 1981.

The Ocean City Board of Trade says that real estate agents are equally busy. In 1981, over 620 condominium apartments were sold for a total of $46.9 million, $6 million more than last year, even though the average cost of an oceanfront unit went through the roof--from $61,000 in 1980 to $110,000 last year.

When asked, Vignale attributes the city's good fortune to its image. "The reputation and recognition of the city has spread--no gambling, a clean town. The beaches are combed everyday, the streets are swept," he said, apparently discounting the common sight of construction debris. "God, they're building everywhere in Ocean City. If there's a vacant lot, they're putting something up.”

The Flying Cloud, an eight-story, oceanfront condominium nearing completion, is one of the bigger projects underway. To Marion Burke, a native of the Delmarva peninsula, it has meant steady work not too far from his home in Delaware. But to Richard Jarvis and George Purnell, its merely the latest feather in their hardhats.

Over the past 20 years, Purnell and Jarvis have become the area's dominant contracting firm. Jarvis, 37, started out driving nails for Purnell years ago; his income, today, as a full partner, is considerably higher. "We build 50 percent of everything that's built in Ocean City," noted Jarvis, which is why Mayor Kelley calls them the city's "tycoons."

Sitting in their bayside office, facing the area's vanishing marshland, Purnell, 43, suntanned in his madras shirt and ostrich-skin cowboy boots, sips a Budweiser and gives one reason for their success. People, he says, "want a place at the beach." To that end, they are building three more condominiums: a $2.7 million, 56-unit, oceanfront, mid-rise structure; a $1.7 million, 40-unit project; and a $3.2 million, five-story, 84-unit site. "They're rich, rich men," adds Vignale.

Although Ocean City is struggling to stay abreast of its demand for new roads, the critical supply of water and sewerage taps has remained ample. "We've always had a good mayor and council. They've really planned ahead," said Purnell.

Next month, Purnell and Jarvis will start on one of their most ambitious projects, Ship's Cafe, a $20 million piece of the dock. Located on the south end of the city, near 15th Street and the Isle of Wight, its a waterfront community of 68 condos and 121 town houses with a marina. "That's going to be the nicest project that's ever been done in Ocean City," said Purnell. Average price per unit: $150,000.

None of the new buidlings in Ocean City compare, in size, with the hulking, 25-story condominiums that turned this always busy, once quaint, resort into a scaled-down Miami look-alike. Built during the 1972-73 boom that turned bust for a while, they still dominate the skyline.

Today, the emphasis is on 3- to 10-story structures, due to economics, not esthetics. Fire and building code revisions have drastically increased the cost of erecting high-rises. For instance, every unit that stands more than 45 feet above ground level must have a sprinkler system. "That adds $5,000 to $7,000 a unit," said Purnell.

Driving north along Rte. 1, the skeletal shape of unfinished homes spring from the sawgrass and sand. On Fenwick Island, Del., town houses are going up at Seaside Villas, new homes are rising in South Bethany, and Bethany Beach--once a Christian campground--will soon include Bethany Village, an oceanside neighborhood of single-family homes, among its communities.

In Rehobeth, Del., a resort popular with Washington's young professionals, new construction has brought an off-season infusion of $3 million to a village of 2,000 year-round residents. A convenience store is about to open, the Commodore Hotel is adding a $500,000 row of shops along Rehoboth Avenue; the Atlantic Sands hotel plans to open a $500,000 restaurant, four condo units and six apartment units; and a 38-unit motel is also going up within sight of the ocean. "It seems as if this is one of the bigger years," said building inspector Tom Abbott.

Richard Tikiob, an agent for Harry A. Shaud real estate in Rehobeth, said vacation rentals are teeming. "Rental-wise, each year has been better than the last for the last 12 years. The sales market, he added, is "basically about the same. They've been very active.”

Barely a wave away, in Dewey Beach, Jay Prettyman, the owner of the Rusty Rudder, a popular beachside restaurant, offers dinner guests a sunset over Rehobeth Bay and a dock full of candy-colored sails and boats. Starting May 1, shoppers can visit Ruddertowne, a Dickinson Street shopping center with 12 stores--including kite, candy and clothing shops--and a 70-foot lighthouse and observation deck.

From his perch in Ocean City, Purnell predicts that the bulldozers will never stop. Eventually, he says, "it will be profitable to tear down the old structures and start all over."