Privatized Housing: More Than Just a Dorm
What do students want? Oh not much . . . just a bed; a place for their gear; a private bathroom; enough outlets for stereos, computers and blow driers; high-speed Internet access; a gym; pool; socializing opportunities and parking - lots of parking. Can your residence halls provide all this? If not, you and your school may want to look into partnering with a firm that builds and manages off-campus housing.
"Partnering with a private developer has started slowly through the last five years or so with about 100 such projects done this way," says Greg Blais, senior vice president, Ambling Development Company. "But, it's a major trend to watch. We are going to see more and more national developers partnering with colleges and building off-campus housing for students."
Why? For starters, kids today are savvier and more demanding than the students of the '60s and '70s. "That's when most colleges saw their housing boom," explains John E. Vawter, CEO, Capstone Development Corp., West Coast Division. "Back then, the two-students-to-a-room-with-a-communal-bath-at-the-end-of-the-hall model worked well. Today, it's still okay for the freshman experience, but older students want more."
As a result, the four-bed, two-bath suite unit has come into its own with a two-bed, one-bath unit working well for graduate students. While colleges can and have been building these units independently, a private developer offers a unique perspective. "We can build quickly," says Blais. "Procurement, bidding, design and construction can take state schools three years. A private developer will cut that in half."
"As builders, we know what designs, layouts, materials and amenities work best for schools and students," adds Vawter. "Since it's all we do, we have sources and solutions that might not
be available to a college."
Private developers also free up a university's budget. With several different financing options available, private firms can build tax-exempt, not-for-profit or conventional mortgage properties. They can site buildings on or adjacent to school property. If a property is off-campus, the developer can partner with the school in many ways to meet student needs - such as extending university bus service or connecting to the school's Internet - and still get the tax-free status.
While the jury is out on whether a private, tax-exempted venture will affect a bond rating (the assumption is the institution will not let the property fail), Blais remains bullish, "Ratings have not been terribly affected," he says.
Apparently, colleges agree and are signing on. After completing 19 off-campus, garden-style apartment units, smaller colleges began approaching Capstone Development, wanting the firm to build on their campuses. "Basically they said that we understand what students want and how to manage properties," says Vawter. "So they asked for our help."
Whether on campus or off, the new properties remain pretty plush when compared to the residence halls of old. The apartments come fully furnished with nicely appointed kitchens. Some even include washers and dryers in every unit. Each bed has its own voice and data connection.
Luxury amenities - like full exercise rooms, business centers, pools, hot tubs and community rooms - are not un-common. Some even include small convenience stores. To promote an active social life, clubhouses sponsor guest speakers and intramural team sports. And of course, there is plenty of parking. "It seems that today's student comes to school with two cars and a boat," says Blais with a laugh.
As private developers lease by the bed, not the unit, students don't have to assemble their own apartment groups. "Parents guarantee the lease," says Vawter. "At first, we had a single-sex per unit policy, but that was challenged in court. Now you can have co-ed apartments if underage students get written permission from a parent."
To avoid "Odd Couple" situations, students have to fill out a lifestyle questionnaire. To keep students on the straight and narrow, both companies try to employ Residence Assistants as much as possible. "They help maintain a secure, safe environment," explains Blais.
Rules about who can live in these units vary, depending on how the unit was financed. If the developer partners with the school and receives tax-free status, they can stipulate that only students or faculty can live in the apartments. Traditional mortgaging, however, demands following the local housing law. "We gear our product to students," says Blais. "For the most part, young professionals would not be interested in renting out a bed."
The means of maintaining order also vary, depending on the building's location. On-campus housing generally follows school policies about drinking, loud parties and other questionable activities. Off-campus residents may have to register party hours with the management office. "It helps keep things from getting out of hand," says Vawter.
While schools and students are benefiting from the private housing phenomenon, what do the traditional landlords think? "They definitely see us as competition," says Blais. "If a project is financed with tax exempt bonds, it will be cheaper to build. We can either pass on the savings in rent to the student or upgrade the facility with the amenities that the kids want.
"It forces them to up their game," he says. Either way, the students win.