With more visitors flocking to Delaware beaches, businesses are having to get creative to attract seasonal workers, especially workers here on temporary visas.
The dearth of affordable housing is increasingly forcing business owners to purchase housing for employees.
J-1 visa employees, mostly foreign college students, have been coming to work at the beach for the summer for decades. In the post-COVID landscape, J-1 employees are a vital supplemental workforce.
“The work ethic they bring is infectious,” said Haley Ward, team development manager at La Vida Hospitality.
J-1 students have long rented homes near their jobs at the Delaware beach, a necessity since they don’t have vehicles. Now, however, affordable rentals are extremely hard to find, even outside of the downtown areas.
Susan and Rob Wood, owners of The Cultured Pearl in Rehoboth Beach, were forced to use their savings to purchase homes for their J-1 employees to live in.
“We’ve been having trouble with employee housing for 20 years, but now … it just doesn’t exist,” Susan Wood said. “When COVID hit, that’s when it just really got crazy.”
“We’re talking having to close a couple days a week versus being open seven days,” Ward said. “They really help us stay afloat in the summer season when we’re struggling with staffing numbers.”
A growing trend for beach employers
Alex Pires, owner of Highway One Group that runs several nightlife spots in Dewey Beach, purchased several houses and rents to dozens of employees.
Jeff Hamer of Fins Hospitality Group, which runs three popular seafood restaurants in Delaware beach towns, said he’s leasing housing to four of his J-1 employees this year.
Coldwell Banker Premiere’s Kathy Newcomb is also part-owner of Irish Eyes Pub & Restaurant in Lewes. The closest rental their J-1 students could find this year is “far from the restaurant, which is nerve-racking because they will ride bikes or scooter(s) down Coastal Highway to get back and forth to work.”
In Delaware:Why it is so hard to find affordable housing in Delaware
If beach businesses haven’t already purchased housing for employees, they’re likely looking into it. Such is the case for SoDel and Big Fish restaurant groups, as well as La Vida.
“This season, we really wanted to invest in the J-1 program, and housing is one of the biggest obstacles to overcome,” Ward said.
La Vida, which runs restaurants such as Crooked Hammock and Taco Reho, hasn’t purchased property. However, this summer, the company is running a pilot program for J-1 students and managing their rentals.
“It’s the first year we’ve tackled the J-1 program head on,” Ward said.
Each of the five condos houses seven or eight J-1 students, according to Ward, and their rent comes out of their paychecks.
“We see so much value in what these students bring to the table,” she said. “Not only are they incredibly hard workers, but in the cultural value alone.”
Skyrocketing housings costs, demand in Sussex County
In May, there were 3,139 homes for sale in Sussex County, with a median listing price of $550,000, according to realtor.com.
“During COVID, everyone bought all the old rental houses and are renting them out weekly, which eliminates the three- to four-month housing,” Wood said. “Or they got torn down and put in a new one, which are a lot more than these students can afford.”
Coldwell Banker Premiere’s Newcomb confirmed.
“Seasonals have dropped considerably as the older homes have been torn down and replaced,” she said.
“There really is no average” cost of rentals at the Delaware beaches anymore, according to Newcomb, because so many rental property owners rent by the day now (think Airbnb). However, she estimated a four-bedroom home within a few blocks of Rehoboth Beach usually runs about $4,000 a week.
Of the J-1 students spoken to for this story, they all said they pay their employer between $100 and $150 a week for housing.
Background:Why these big-name beach businesses say they have no choice but to house their employees
Housing for J-1 employees, or even workforce housing in general, just isn’t profitable for developers right now, according to Susan Wood.
“The real estate is just too valuable,” she said. “It’s going to have to be some kind of government program.”
The government, however, is struggling to create affordable housing for year-round Delaware residents.
According to a 2022 National Low Income Housing Coalition, there are only 31 available homes in Delaware for every 100 of the lowest-income renters.
The Delaware legislature just last week passed a budget that included about $30 million or affordable housing, and Gov. Carney announced last year the allocation of American Rescue Plan act funds toward affordable housing.
“We don’t have enough (housing) for our own workforce,” said Sen. Russ Huxtable (D-Lewes). “So of course we don’t have it for the J-1s either.”
More:Delaware programs offer $30M to developers to incentivize building affordable housing
On the county level, this month, the Sussex County Council approved $2 million in grants to developers to build or preserve about 160 “affordable housing units.” They distributed a similar amount last year. The money comes from the county’s Housing Trust Fund, launched in 2022 with funds mainly from the American Rescue Plan Act.
Grant recipients will receive $500,000 each for projects planned for mostly central and western Sussex County.
Shannon Marvel McNaught reports on Sussex County and beyond. Reach her at smcnaught@gannett.com or on Twitter @MarvelMcNaught
