DALLAS, TX – Some 47,700 new beds are expected to come to market in privately-owned, purpose-built student housing properties in time for the Fall 2016 semester, with university markets in the Southeast region the primary target, according to Axiometrics, a provider of student housing and apartment market intelligence.

Meanwhile, the maturing real-estate sector continued its strong performance during the Fall 2016 leasing season.

Supply Going South

Seven of the 10 university markets expecting the most new supply this fall are in the Southeast or Southwest. Two are in the Midwest and one is in the Northeast Corridor.

To date, 43,800 new beds are scheduled for delivery in time for the Fall 2017 semester. The geographic spread of the university markets with the most anticipated new properties is much more diverse.

The new supply to be delivered this year is the third highest ever for privately-owned properties, behind 2014 and 2013.

“Though deliveries of new supply are not as high as they were a couple of years ago, demand remains strong, and students are generally absorbing the new beds,” said Jay Denton, senior vice president of analytics for Axiometrics. “One thing that differentiates student housing from conventional apartments is that the distribution of new supply can change dramatically year to year. As construction near one school meets the demand, a building boom will start in another university market.”

Metrics Show Strong Performance

Rents and leasing velocity for the Fall 2016 leasing season both increased from Fall 2015.

“Privately-owned student housing is quickly becoming an integral sector in real estate, and performance metrics demonstrate its strength,” Denton said. “Axiometrics forecasts rent growth to remain strong over the next five years and occupancy to stay above 95%, as enrollment continues to rise nationwide.”

As has been the case, rents are higher the closer to campus a property is located. Effective rent growth was highest for properties one-half mile to one mile from campus.

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MELISSA, TX – Gardner Capital Development has been awarded a $1.3 million reservation of affordable housing tax credits from the Texas Department of Housing and Community Affairs to develop 93 independent, mixed-income, senior residences in the Melissa community of Texas. This $16+ million community will include a main three-tale building with elevators and 93 energy efficient, one- and two-bedroom cottage-style apartments for seniors age 55 and older. 

Part of a 35-acre plotted mixed-use development that will eventually include retail components, Gala is the first mixed-income senior living community development approved in Melissa, Texas. It is also the only mixed-income property in Melissa that serves senior residents at affordable rents. With a population of approximately 9,500, the city of Melissa is located 35 miles north of downtown Dallas in the dynamic growth area of northeast Collin County.

“The Gala Community will focus on providing its senior residents not only with well-designed, affordable housing, but with numerous upscale amenities, including multi-purpose community rooms, a fitness center, resident lounges, a pool, and covered porches,” said Michael Gardner, Principal and CEO, Gardner Capital Development. In addition, a full calendar of weekly and monthly senior-focused events will encourage residents to be physically and socially active.  

Construction of the development is anticipated to start in the second quarter of 2017, with completion expected fall of 2018. Gardner Capital Development Texas, LLC will serve as the developer for this project. Other members of the development team include Gardner Capital Construction, LLC, Cross Architects, and Allied Orion Group property management.

Gardner Capital is an affordable housing and renewable energy tax credit development, syndication, and investment company with primary regional offices located in St. Louis, Dallas, San Francisco, Atlanta, and Springfield, Missouri. Since 1992, Gardner Capital has invested more than two billion dollars of equity in affordable housing alone.

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NEW YORK, NY – A joint venture announced between the Community Development Trust (CDT), a real estate investment trust that provides capital for the preservation and creation of affordable housing, and Volunteers of America (VOA), a national nonprofit affordable housing owner and developer, will ensure that a Colorado Springs, Colorado, apartment complex continues to provide affordable housing to 256 low-income families and individuals.

The CDT-VOA joint venture to recapitalize Summit Apartments, a 30-year-ancient complex at 2795 Reeve Circle, will also fund $1.5 million in improvements to the property, including kitchen updates, new windows, other energy upgrades and new retaining walls. The Colorado Springs Housing Authority (CSHA) also is a partner in the joint venture.

“CDT’s investment—our first in Colorado—is part of our larger commitment to ensuring long-term access to quality, safe and affordable housing throughout the country,” said Brian Dowling, Senior Vice President of Community Investments at CDT. “Our joint venture with Volunteers of America also serves as a model of how a national institutional investor can partner with a large nonprofit organization to help address the nation’s critical shortage of affordable housing.”

All of the units in Summit Apartments will remain preserved for families and individuals earning between 50 and 80 percent of the area median income (AMI).

Constructed in 1986, the property was bought by Volunteers of America in 1993 from the Resolution Trust Corporation using financing provided by Colorado Housing and Finance Authority.

The Colorado Springs Housing Authority was integral to the success of the latest Summit Apartments transaction, having facilitated a tax exemption to the CDT-VOA partnership that expanded and extended the level of affordability at the property. Through partnering with the CSHA, CDT and Volunteers of America were able to increase the level of affordability so that 85 percent of the units serve families at or below 50 percent AMI and 15 percent of the units serve those at or below 80 percent AMI.

“As there is a shortage of affordable housing in our community, the preservation of existing affordable units is critical to our goal of providing quality housing for low-moderate income families,” said Chad Wright, Executive Director of the CSHA. “The ability to make strategic partnerships in the pursuit of this goal is essential. This collaboration exemplifies that approach and will benefit families in Colorado Springs for many years.”

Civic leaders have identified the lack of affordable housing that accommodates low- to moderate-income residents as a high priority in Colorado Springs and across El Paso County. An October 2014 Affordable Housing Needs Assessment commissioned by the city and county governments shows that:

About half of renters and a third of homeowners with mortgages in El Paso County are cost burdened, meaning they spend over 30 percent of their income on housing.

When comparing the distribution of household incomes to the distribution of housing units priced at levels these households can afford, El Paso County has an estimated gap of 24,513 affordably priced units.

Given the high cost of land in Colorado Springs, increasing construction costs, including extension of new public infrastructure and public opposition to new affordable multifamily housing properties, the report recommended that city and county officials “seriously” consider the acquisition, rehabilitation and preservation of its existing affordable housing stock by teaming with a nonprofit developer or entering a limited partnership.

The Summit Apartments transaction with the triumvirate of CDT, Volunteers of America and the Colorado Springs Housing Authority is a strong example of a for-profit, a nonprofit and a public entity working together for the common goal of preserving affordable housing in the community.

CDT invested approximately $2 million into the partnership. CDT and Volunteers of America closed on an acquisition bridge loan funded by CDT in June and then closed on permanent financing in July. The permanent financing provides attractive long-term financing from Freddie Mac through Wells Fargo, National Association.

“We are proud to partner with CDT and the Colorado Springs Housing Authority to preserve and improve the affordable housing opportunities provided at Summit Apartments,” said Robert Gibson, Executive Vice President and Chief of Staff for Volunteers of America. “By providing families with the space they need and services that help parents and their children thrive, we help families build communities.”  

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