ORLANDO, FL--This year we have produced two student housing reports: one for UCF and the other for USF so that you will now be able to review both of these markets. Only rent by the bed apartments were used in the USF report while both rent by the bed and rent by the apartment were used at UCF.
The rents quoted are the rents that were being charged in August or the last date before lease‐up was completed so some communities will have higher rents from students who signed up early. Some communities lowered rents multiple times.
Last year we talked about how the term “recession proof” is no longer a viable description of the student housing market. However “recession resilient” may be an appropriate term.
Both of these markets had disappointing lease up results, partly as a result of the downturn in the economy which is supposed to produce more students because those who are out of work go back to school. While some students did go back to school to retool their skills many of them were older who already live in the community and are, essentially, day‐hop students who are not customers for student housing.
The busted housing market, both single family houses and busted condos also produced many unsold homes that now are being rented at bargain prices.
(UCF campus aerial photo, middle right)
These problems are evident in both communities. We hope that they will only last a year or two since both schools are in growth modes, especially at USF where the present enrollment is about 43,000 students at it s main campus with another 3,000 at its other three campuses.
At just over 50,000 students UCF may be starting to curtail its growth on the main campus while continuing to grow its satellite campuses. Neither school reached 100% occupancy in their on‐campus housing.
In Tampa at USF it appears that overbuilding reared its ugly head, as it does from time to time in university towns. Almost 2,600 beds, including 1,050 beds on campus in suite style rooms each with two bedrooms and adjoining bathrooms, plus the fact that USF required freshmen to live on campus, seem to have caught some owners off guard.
Both of the new off‐campus complexes, The Province (822 beds) on the south side of campus and Sterling on 42nd Street (722 beds) on the north side of campus, did relatively well in a bad market.
(UCF School of Education buildings, middle left photo)
On the whole rents should have been lowered earlier in the rental season in an effort to try to offset the arrival of these new units. There was no new construction at UCF.
However 763 bedrooms are under construction in a complex to be known as Camelot and another 535 bedrooms at the old Addison Place site are slated for construction. Camelot is scheduled for delivery for the 2010‐11 school year, with Addison Place to start at a time yet to be announced.
Several owners at UCF appear to have seen a soft market coming and reacted aggressively by lowering rents early. As a result occupancies at UCF are much better than at USF. Some owners reduced their rents substantially, one or two by more than $90 per bed, with the average reduction at $49 per bed (rents for 4x4’s were used for this analysis).
Only the well located properties had minimal rent reductions while most eliminated move‐in and other fees. Properties that provide access to the school through the Science Park, on the south, and from McCulloch, on the north, did the best.
The UCF affiliated properties also did very well this year. Pegasus Pointe, with its 4x2’s and distance from the school, pitched the parents of students that it is better to use the Shuttle Bus to get to school rather than pay the high price charged by the school to live on campus.
By the way the Shuttle Bus is a must for all properties, as it is for the school. It limits the amount of traffic on campus and on the nearby roads. That’s good for both the school and the students.
Returning to my original premise, student housing seems to be “resilient” to many of the adverse rental market pressures. So long as owners have the ability, and willpower, to lower rents and move‐in fees quickly when over building occurs then they will be able to keep occupancies high.
(UCF student housing pad, bottom left photo)
Student housing has fared better than the overall apartment rental market. In addition the expected growth in the population of college age people will help the rental market.
It is a time to emphasize management skills, a time to do those rehab projects that you may have been putting on hold because you didn’t think they were needed.
Now you will have to compete for the dollars of those students who have also become more astute renters. It is not a time for the faint of heart but a time for the young and industrious to make sure that you have the best property on the block.
If you have any question about the market at either UCF or USF call the undersigned. Also, when selling or buying student housing in Florida call Paul Guyet (top right photo) at Smith Equities Real Estate Investment Advisors.
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