With Meghna Chakrabarti
Private developers and colleges are teaming up to build luxury dorms. At what price to the college experience?
Joshua Brown, professor of education at the University of Virginia. Lead author of the study "The Hidden Structure: The Influence of Residence Hall Design on Academic Outcomes." (@HigherEdSoc)
Jeff Jones, principal at Capstone Development Partners, a student housing real estate development company exclusively focused on working with colleges and universities in public-private partnerships.
Capstone recently completed a new residence and dining hall at the University of Massachusetts, Boston. The building accommodates more than 1,000 first-year and transfer students.
From The Reading List
Boston Globe: "Pricey campus housing triggers a debate in Boston" — "At the newest residence hall for Northeastern University students, kitchens come with stainless steel appliances and granite countertops. Floor-to-ceiling windows bathe rooms in sunshine, and residents can exercise in a state-of-the-art fitness center or study by a fireplace in the lobby.
"The dorm room has gone upscale.
"But when they open this fall, units at LightView Apartments will come at a price, one likely out of reach for many low-income Northeastern students or those on financial aid.
"Run by a private developer, LightView requires an annual lease that makes it more expensive than traditional campus housing with eight-month terms: beginning at $16,008 a year for a shared room, and $19,068 for a single, compared to $12,504 for the most expensive on-campus shared dorm, and $14,698 for a single. Meanwhile, students on full financial aid at Northeastern receive about $15,660 for room and board, leaving them far short of LightView’s annual costs.
"'This is luxury-style housing,' said Nick Boyd, 22, a senior at Northeastern studying electrical engineering and member of the Northeastern Housing Justice Coalition. 'They should be building housing at price points that students across the income spectrum can afford.'
"But Northeastern officials hail LightView as a major saving because the costs were shouldered by a private company, one of the first such partnerships between local universities and developers. The apartments are proving popular among juniors and seniors; nearly 85 percent of the 825 beds are already leased.
"'This novel approach means that the university didn’t have to spend in excess of $100 million to build a new residence hall,' said Michael Armini, Northeastern’s senior vice president for external affairs. 'Those funds can now be invested in our core mission of teaching, research, and providing even more financial aid.'
"Across the country, universities facing financial constraints and pressure to cater to higher-income students are increasingly turning to these private partnerships. Institutions can also make additional money charging for amenities such as air-conditioning, kitchens, and views of the city."
Axios: "College housing costs are out of control" — "The prices for U.S. student housing have never been higher, rising to an average of nearly $92,000 per bed, data shows.
"How we got here: Previously a lightly invested subsection of the housing market, investment managers, REITs and cross-border investors jumped in with both feet and were behind 50% of all acquisitions in the sector by early 2018. That's up from just 30% a few years ago, new reporting from Real Capital Analytics finds.
"Investors have saturated the space to the point that capitalization rates — the profitability potential on real estate investments over a one-year horizon — have fallen to a record low.
"'Student housing was once a property sector ... not managed by professional investors,' Jim Costello, senior vice president at Real Capital Analytics, writes. 'Institutional investors have "discovered" this sector in the current economic cycle and price performance has reached record highs as a result.'
"The big picture: Student housing prices are just the latest example of the ongoing doldrums in the U.S. housing market that has been driven largely by decreasing home affordability, even though price increases have slowed in 2019 and mortgage rates are near record lows."
Forbes: "From Tanning Terraces To Resort-Style Pools, Student Housing Is Going Upscale" — "Student housing has come a long way in the decades since most Baby Boomers went to college. Our generation had a twin bed, desk and chair, maybe a hot plate and Crock Pot, in tiny dorm rooms. The bathroom was down the hall and the gym was across the quad – no fun in winter months for millions of us.
"As students head to college campuses campuses in August and September, more are luxuriating in spacious apartments steps from class with premium amenities. There was off-campus housing when Boomers were undergrads, too, but it tended to be somewhat run down, and it rarely offered luxuries.
"Three trends seem to be driving this growth in upscale housing. The first is the population increase in the 18 to 24 year old demographic, which has soared from 27 million in 2000 to close to 31 million in 2016. While the age group has been fairly flat since then, it’s projected to grow again slightly for the next decade and then strongly after that. Overall growth has spurred demand for more housing and a newer, nicer supply."
Adam Waller produced this hour for broadcast.
This program aired on July 30, 2019.