| COVER STORY, AUGUST 2011
AN ON- AND OFF- EXISTENCE
College housing administrators and off-campus developers strive to co-exist.
At its annual InterFace Student Housing Conference in Austin this year, Texas Real Estate Business’ sister publication, Student Housing Business, brought together a group of university housing officers to discuss balancing on-campus and off-campus living. Joan Millane, principal of Millane Partners, was the moderator for the panel, which consisted of Floyd Hoelting, executive director of division of housing and food service at the University of Texas; Rosanne Proite, director of housing and residential life, Texas State University-San Marcos; Javier Hidalgo, interim executive director of residential life and housing at the University of Houston; and Lionel Maten, director of housing and residential life at the University of Texas at San Antonio.
Millane: What are some of the challenges and changing factors that developers should consider in their due diligence before building new student housing near a university campus?
Hoelting: Every institution isn’t the same. What works next to this campus won’t work at another campus. So when I speak to you, I speak to you from the University of Texas and everything is different on all campuses. Second there are shifts in enrollment. Financial aid effects where students live. Financial aid is shifting. At UT, we’re trying to keep enrollment down some. We’re at 50,000 and one of the largest. Really, that isn’t a trophy as far as we’re concerned. Austin Community College is going to double us in a few years. They’ve added about 15 campuses since I’ve been here. Dobie Hall, right off campus from UT, has three or four floors of ACC students. So be open to what else is available around the campus because it’s always different. There are shifts in university housing goals. Some universities house freshmen; some require sophomores. That discussion is always up. I never speak to a faculty group on my campus where someone doesn’t say, ‘Well Floyd, if our students are doing so well on campus, why don’t you require them to live on?’ Whenever that wave goes up through a provost, that can change overnight. We don’t require it. I personally like to house students who want to live with me rather than force them to live with me. However, that could change tomorrow. Universities require students to live on for any number of reasons, but the biggest one is does that fit with the core objectives of that university? Do we think that we can impart that culture and what we teach within that culture better if they live on? Most universities do. How much do we believe that? That makes a difference. That’s where we start getting on with requiring freshmen, freshmen and sophomores, and of course, some private schools that have that strong concept to require all four years to live on campus. That can change. Just because we did it last year doesn’t mean we will not do it next year. City codes change and there are shifts in how students feel about living off campus and on campus. Another thing that changes is the number of university faculty and staff that need a place to live. We have 20,000 faculty and staff; those folks all have to live somewhere. If there are apartments suitable for what they are looking for, especially young staff that don’t want to buy that might be finishing this degree or that degree before they go to another campus, that is a whole housing market next to a university that many builders forget about or don’t understand. In fact, it’s so important that universities are putting money into that initiative just to attract new faculty and staff.
Millane: When [private developers] are looking to develop or operate, what are the concerns for you as they start to develop?
Proite: There are a couple of things that come to mind for me. Whether you’re looking to develop on campus or off campus, I would encourage you to understand the basic structure of the campus. There was a comment made in one of the panels yesterday about how the campus can tend to slow you down a bit. I think that can be true, but frequently the slowdown occurs when people don’t understand each other’s goals and mission and when one group doesn’t understand the organizational structure and the rules by which you need to play to be successful. We manage everything. We manage large budgets. We’ve been in this business for a long time. We get it. And frequently what we receive from developers are pats on the head. I think we need to develop more of a mutual understanding and respect than what has been traded back and forth. I would say take some time to understand who you’re dealing with. Take some time to understand who the decision makers are, who the influencers are on the campus, particularly when you are looking to develop on campus. The other thing I would encourage you to understand is long range. I absolutely understand the difficulty that you have when coming into a new market or trying to decide whether or not you’re going to expand. I understand that San Marcos, Texas, is viewed as a fairly hot geographic area these days. I’ve talked with probably two or three developers a month for the last four years. Everybody thinks that they want to come into our community and build. We want you to understand what’s happening on campus. I’m going to be very honest with you. I’m going to tell you what our needs are. I’m going to also tell you how many developers are in the mix. I am taking an additional step based on some things I’ve heard here where I think I’m going to establish a relationship with our city planners. As people hear Texas, there are all kinds of dollar signs and opportunities, but I have a significant concern for overbuilding. If there’s no one, single place to get it, maybe we need to develop that kind of consortium of information. I want everybody to make informed decisions when they want to invest in the area.
Millane: In some areas we have some unhealthy competition that goes on. Do you have ideas as to how we could work better together to deal with some of this?
Proite: There’s a sense that we want to keep our students; you have to deal with them on your own, we’re not going to help you. A lot of us feel if there’s not a requirement that’s a positive thing because those students who want to be on campus are going to stay. We are seeing a reversion to on-campus living. Many of us are struggling to find ways to make students begin to think about moving off campus so I don’t know that the competition is quite the same as it used to be. There are some things that campuses are trying to do to better partner with folks off campus, certainly being a partner with the campus in terms of the dean of students’ office and the vice president for student affairs’ office so that you understand better what’s going on on campus. You may be looking at the possibility of participating at some on campus events to show that you are partnering with the university. The other issue about some of the stereotypes. It’s important for parents and students to hear is off-campus safety. How do campus administrators feel about places where things start to get out-of-hand and there’s no one there to deal with them? You’re relying on the police to be your eyes and ears. We’d like to see more active involvement, more on site participation and a more comprehensive program to deal with some of those issues.
Crescent Resources Rounds Out Portfolio with Circle West Campus
Charlotte, N.C.-based Crescent Resources has headed west to develop Circle West Campus in Austin for University of Texas-Austin (UT-Austin) students. Crescent has developed a specific product line of apartments known as Circle, which is designed to reduce energy consumption and promotes a neighborhood atmosphere.
With other Circle products mostly in the Southeast, Circle West marks a series of firsts for Crescent Resources. The development is the first Circle product for Texas and it’s also Crescent’s first Circle product designed for students. Cres cent is currently looking at markets in the Southeast and Texas to expand its student housing portfolio.
Crescent has focused on UT-Austin because it boasts an enrollment of about 51,000 students and the demand for off-campus housing is high considering the limited amount of on-campus housing, according to Tim Dison, vice president of Crescent Resources.
“We pursued sites near UT-Austin market given the strong demand. The key was finding a site large enough to develop an appropriate density given the limited number of large parcels in the area,” said Dison.
Crescent found the land within walking distance of campus at the intersection of West 25th and Longview streets after touring with Apartment Realty Advisors, the listing broker. Other companies key in developing Circle West include Kelly Grossman Architects, Rampart Construction and Bury+Partners Inc., all of Austin.
The design of Circle West blends Crescent’s pursuit of green standards while appealing to a broad student base. To do this, Crescent made sure residents are offers residents amenities.
“Many of the amenities are focused on the lifestyle of students. Circle West will have a resort-style pool, tanning beds and a community study café and lounge,” said Dison.
The 167-unit complex is being built to meet the requirements for the Austin Energy Green Building (AEGB) Multifamily Rating, which is a set of criteria that promotes efficient mixed-use and multifamily building design. The AEGB Multifamily Rating assesses the design, construction and performance of new developments. In addition to those requirements, each apartment in Circle West will feature Energy Star appliances.
Construction is under way on Circle West, which should be ready for occupancy in June 2012. Dison is optimistic about the future and expects that student housing developers like Crescent will see an increase in demand.
“The current and future budget challenges faced by colleges will encourage schools to turn to the private sector to help fulfill housing needs of students both on- and off-campus,” said Dison.
— John Nelson |
Aspen Heights Goes Back for Seconds in San Marcos and San Antonio
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An Aspen Heights cottage product
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Since its founding in 2006, Aspen Heights has distinguished itself among student housing developers with their best of both worlds mantra: All the best amenities of a high-end apartment development — pool, fitness club — plus the students’ own 2,400-square-foot, four-bedroom cottage.
Aspen Heights has developed their cottage-style homes for affluent college students across Texas: Baylor in Waco in 2007, Texas A&M in College Station in 2008, University of Texas-San Antonio (UTSA) in 2009 and Texas State University in San Marcos earlier this year.
The company will be breaking ground again in August for Phase II developments in San Antonio and San Marcos. The new San Marcos site is connected to the previous development, while the San Antonio Phase II project is across the street from the previous site.
Aspen Heights decided to develop a second site in these established markets because of the positive reaction to the initial developments.
“The market really loved our cottage-style developments, they responded excellent to Phase I,” said Greg Henry, founder of Aspen Heights.
When looking at a potential project’s viability, Aspen Heights has to first look to the proximate school. For the San Marcos and San Antonio developments, they noticed Texas State and UTSA are showing growth with 2010 student populations of roughly 32,500 and 30,000 students, respectively. These populous markets are attractive to student housing developers like Aspen Heights.
“Growth is what really draws (Aspen Heights). The occupancy around the Texas schools we develop in are high and the pricing is good for our compensations,” Henry said.
Texas State and UTSA are also raising their standards, which further makes their student base alluring because these affluent students tend to be the ones who can afford staying in the upper-echelon of student housing like Aspen Heights.
“The need for better student housing in Texas for students who could really afford it was just so apparent,” said Justin Jaksha, regional sales manager of Aspen Heights.
Behind University of Texas Austin and Texas A&M, Henry said some of the “outlying schools have the students who aren’t in the top 8 percent of their class but are really smart kids with a great education.”
Since there was available land near the previous San Marcos and San Antonio sites, Aspen Heights decided to capitalize on the established markets.
Aspen Heights has developments in other parts of the country including Georgia, Louisiana and Alabama. But being based in Austin, Aspen Heights has made its mark with their developments in Texas.
“Texas overall is a friendly state to develop in. There’s a really good subcontractor base out of Texas,” Henry said.
Texas has one of the highest property taxes in the country, but developers can usually make up for it in their rates. Texas has also been bouncing back from the housing bubble and banking crisis, out-performing other states.
“Just from an economic standpoint, Texas obviously weathered the storm a lot better than other states statistically and has seen some growth. There’s kind of an entrepreneurial-type attitude and spirit here,” Jaksha said.
With Phase II of the San Antonio and San Marcos sites breaking ground in August and more sites being developed in the near future, it’s easy to forget that Aspen Heights was founded only 5 years ago.
— John Nelson |
American Campus Communities Stays Busy in the Lone Star State
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ACC has also commenced on a student housing development near University Texas at Arlington.
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Student housing developer American Campus Communities (ACC) owns and manages properties in close proximity to colleges all over the country, but it carries a particularly strong presence in its home state of Texas. Based in Austin, ACC owns 17 student housing properties and manages eight others in Texas alone.
In mid July, ACC commenced construction on a student-housing complex next to Texas Tech University in Lubbock. The Village at Overton Park will be Texas Tech’s closest and newest off-campus housing development. It offers 612 beds and features a 7,400-square-foot community center that houses a fitness center, resort-style pool, lounge and Internet café.
ACC has also commenced construction on a project at Texas A&M University in College Station that will be delivering for a fall 2012 occupancy, according to Chuck Carroll, ACC’s director of development. ACC has also commenced on a student housing development near University Texas at Arlington.
Meanwhile, ACC has two Texas projects that are delivering for occupancy this fall: The Villas at Babcock in San Antonio and The Villas at Sycamore in Huntsville. According to Bill Bayless, CEO of American Campus Communities, deliveries in 2011 and 2012 account for more than $500 million in development.
In the economic downturn, ACC has noticed a rise in students going to colleges closer to home, which has bolstered the enrollment figures for colleges that now need student housing.
“(The downturn) has actually helped (ACC) to some degree. Students are staying in-state to avoid paying out-of-state tuition,” said Gina Cowart, ACC’s vice president of investor relations and corporate marketing.
Carroll says that enrollment trends in schools like Texas Tech and Texas A&M are key to ACC’s development standards.
“We look for markets with very high barriers to entry. All these ( Texas markets) met our enrollment criteria of having either growing or steady enrollment,” said Carroll.
After looking at enrollment trends of favorable markets, ACC searches for sites within walking distance to campus. Next, it studies the different developments in the same market to notice trends.
“From a product perspective we start looking at the different products offered and how we can differentiate a product type that we do on the ground,” said Carroll.
ACC’s due diligence includes looking at property tax rates and how that will impact a development’s overall cost. Property taxes in Texas are higher than most other states and can pose a problem for developers. Overall, it is another cost that developers need to address.
“(Property taxes) are part of the project costs that are factored in,” said Cowart.
Being based in Austin, it’s natural for ACC to develop heavily in Texas. Carroll attributes proximity as well as relationships with colleges for its Texas presence.
“(ACC is) building on those (relationships) for developing off-campus projects, acquiring existing assets or working with the universities in developing on-campus housing,” said Carroll.
ACC is staying busy outside of Texas as well. They have commenced construction on an off-campus project near the University of Buffalo in New York, an apartment community near the University of Wyoming in Laramie and housing near Kennesaw State University in Georgia.
— John Nelson |
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