replaced,” says David J. Adelman, CEO of
Philadelphia-based Campus Apartments.
“We’re now seeing more opportunities on
the development side, mainly involving
groups who have come to us with entitled
land and don’t have the financial wherewithal, due to the tightening credit markets,
to do the project on their own.”
Similarly, JPI Student Living’s assistant
vice president, Mark Stinger, says that his
firm’s development activity has increased
by some 25% over the past two years, and it
accounts for 60% of the company’s business.
For the most part, much of the student
housing so far has been built off campus, set
up similar to typical apartment complexes.
Irving, TX-based JPI, for instance, operates
solely off campus, but Stinger says the firm
“entertains” the idea of on-campus development. “It’s not our preferred platform due to
the complexities of working with the universities,” he explains, noting that partnering with these institutions tends to lengthen
the project timeline, adding to costs.
Yet others have gradually begun teaming
up with universities. Although the majority
of Campus Apartments’ projects are off-campus, Adelman relates that its on-campus
division is growing. “We’re getting more
phone calls from universities that are having
budget issues and may not be able to
develop on their own,” he says. The firm’s
on-campus work generally involves signing
a ground lease for school-owned land. Yet
because it’s on their land, Adelman says, the
university will typically want to maintain
some level of control, such as in the design of
the project or how it’s operated. “They want
to make sure that when you build it, you
have a vested interest in operating it and
being a long-term partner.”
The company recently broke ground on
a $27-million, 398-bed complex for graduate students at Emory University in Atlanta,
in which it signed a long-term ground lease.
It also opened up a $30-million, 200,000-sf
property called College Row at
Philadelphia’s Franklin & Marshall College
last summer that includes 117 units and
50,000 sf of retail. The property is also subject to a long-term ground lease.
But that arrangement isn’t essential to
such developments. Up until a year ago, the
vast majority of Education Realty Trust’s
projects had been on campus, and the firm
has recently been awarded about $2 billion
of new construction, mainly on campus—
none of which involves a ground lease. “In
those cases, it has traditionally been as a service provider,” Trubiana explains. “The
long-term ground lease is a relatively recent
paradigm shift.”
EDR finished off $158 million in on-
campus student housing this past summer,
and it currently has close to $300 million in
projects under way. Though the company
hasn’t announced any properties to be built
under a long-term ground lease just yet,
Trubiana says it is working with a number
of institutions.
Despite its success with on-campus
projects, last year EDR decided to focus
on off-site opportunities where it would
have an ownership or equity position.
Off-campus product now makes up 30%
to 40% of its construction activity, com-
pared to just 10% in prior years.
“As a strategic business plan, we are
focusing our energies on both on-campus
communities, where we can deploy our capital and have an ownership interest under a
long-term ground lease, and secondly, looking for special situations in markets with significant barriers to entry where we can
develop off campus,” the executive says.
The firm plans to do two to three off-campus developments per year for the next
several years, Trubiana adds. EDR completed its first project—a 600-bed commu-
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