The Curious Case of Luxury Student Housing

The American gentrification story will sound familiar to many: A historic neighborhood, home to traditionally transit-oriented apartments and modest single family homes, slowly becomes destitute and outdated as the automobile era drives population away from city centers. The neighborhood becomes derelict and neglected, but eventually, the bohemian counterculture — the artists, performers, musicians, and designers of a creative class — occupies and slowly kindles mainstream interest back into the area. Aside from retired, amenity-seeking empty nesters moving back into urban areas, most of these newcomers are young adults. There is a trend in these urban population shifts that is not often discussed — the study of college-aged students and their corresponding living patterns. Unlike other burgeoning urban neighborhoods, students occupy and dwell in a unique, confined location in close proximity to their college campus.

Land-grant universities like the University of Minnesota were commonly located in centrally-located cities within their respective states, and many slowly transitioned to rely on their respective college for economic growth. As enrollment increased, the pre-automobile era neighborhoods in close proximity to the classrooms slowly became student-occupied. Recently, a new form of student-focused gentrification has arisen, breaking the decades-long trend and stereotype. New amenity-filled apartment buildings, almost exclusively advertising to students, are being constructed close to college campuses. One would think this form of student-centric gentrification — “studentification,” as some scholars have defined and acquiesced — would follow the path of the gentry and price original populations out of the area.

However, if the original population of these college neighborhoods were historically occupied by a similar group for decades, are students simply pricing out other students?

Screen Shot 2014-12-14 at 8.57.40 PM

The Marshall & The Venue – new student apartments in Dinkytown (Source – Google Street View)

Hypothesis

In a unique, demand-constrained market that college neighborhoods establish, the supply of housing fluctuates and increases based off of targeted students’ lifestyle desire. Normally, increased population density through the construction of dense dwelling units would continually attract population; however, the desirability to live in a student neighborhood is likely limited, and has been shown to appeal to students only. Therefore, the population in college neighborhoods is consistent with student enrollment, and does not increase as rapidly as would be observed in a traditionally gentrified area. I hypothesize that as the quantity of upscale student housing supply increases, the interest in older housing stock proportionally decreases. I estimate that these new, amenity filled units might have more allure to students and their parents. This may result in a situation where landlords who control the older stock need to lower prices or renovate property in order to compete with the new apartments. Unless the landlords have the capital to renovate outdated properties, rental rates will decrease, allowing thriftier students to realize cheaper living situations at little consequence.

Due to the unique student housing market, many landlords may attempt to sell their now obsolete cash cow, and since the desirability of the area is low to non-students, home sales prices may also decrease. In the long term — and past the scope of this post — the trend to commute to campus from distant areas may become less popular, and the amount of students living near campus could increase. However, assuming enrollment stays constant or grows at the slow rate that it has been over the past several decades, a housing saturation point will be reached, and the restricted nearby population will create a hyperlocal and highly competitive rental market.

700 Washington in Stadium Village (Source - 700washington.com)

700 Washington in Stadium Village (Source – 700washington.com)

Current Trends

Social and economic controversy has arisen in this new development phenomena in college neighborhoods around the country, with opponents citing many concerns that have paralleled common gentrification fights. In Madison, WI, residents in the student-majority Mansion Hill neighborhood fought a proposed development that would include 59 units and tear down an old apartment building called the Highlander House. In November 2013, opponents cited the higher costs, the removal of existing affordable units, and the effect of the construction on the historic nature of the neighborhood as main concerns. Meanwhile, the city council in Iowa City, IA — home to the University of Iowa — proposed a zoning ordinance in February 2012 that would limit the number of bedrooms in new development apartment units from five to three. This proposed change originated from the fallout of three student housing proposals that were cancelled in response to large opposition from neighbors. Jeff Davidson, the city director of Planning and Community Development, was quoted in a February 17, 2012 article from The Daily Iowan, stating that “the projects were very controversial… (they) involved taking out older buildings and replacing them with large student apartment buildings.”

In Minneapolis, a visible student housing boom since 2010 has put the surrounding college neighborhoods on edge and has made long-time residents weary of the rapid change. The construction boom has progressed in the past five years, and has bucked a decades-long trend that the University’s enrollment consisted primarily of long-distance commuters. After several similar projects came to fruition with little opposition, tensions flared when Minnetonka-based Opus Development proposed a six-story, 140-unit, mixed-use building in the quasi-historic Dinkytown business district on the northern edge of the University of Minnesota. Local business owners and a few long-time residents created a group called “Save Dinkytown” to combat the proposal from coming to fruition; in a June 2013 op-ed in the Minneapolis Star Tribune, a leader of the Save Dinkytown movement requested citizen action to “preserve the historic and eclectic character of the four-block Dinkytown commercial district.” The author also stated that only well-off students could afford the complex — providing attention to the odd fiscal divide between parent-backed “wealthy” students and financially struggling students. The building was approved in a controversial vote by the Minneapolis City Council on August 2, 2013. The building was completed in August 2014.

In addition to the Opus project, several large developments opened for the 2014-2015 school year, including the 215-unit “Metro Park East” project, a 337-unit project called “The Marshall,” and a 211-unit project called “The Bridges.” This large influx of apartments has driven visible competition for tenants. In an October 2014 Star Tribune article, it was revealed that the owners of Metro Park East hope to be three-quarters leased by the end of the year — a low estimate compared to previous projects’ lease-up numbers. However, the article also quoted local developer Kelly Doran, who believes that the percent of students that live near campus has increased from 25 to 60 percent in one generation.

The Bridges, opened in August 2014 (Source - urbanplanet.org)

The Bridges, opened in August 2014 (Source – urbanplanet.org)

Methods

Due to the local importance and media coverage of the many new student housing projects, the student neighborhoods around the University of Minnesota were utilized as the main study site. Property-specific rental information in college neighborhoods that primarily consisted of 18-20 year old individuals within one mile of a campus boundary were used. These areas consisted mostly of the Marcy-Holmes, Southeast Como, and Prospect Park neighborhoods in Minneapolis.

Juxtaposing individual rent listings, general vacancy rate trends were researched on a census block basis to attempt to reaffirm trends. Vacancy rates were found from 2010 Census data and 2012 Census estimates, and PolicyMap was utilized to extract and map the data. This data allows for either further confirmation or heightened discrepancy in trends. To cross-analyze further student rental trends, other college-focused cities that have had new student housing projects completed in the past five years were also studied. Three cities that host Big Ten universities were studied: Madison, WI; Iowa City, IA; and Champaign & Urbana, IL. Census block groups from student neighborhoods in Minneapolis were also utilized. The blocks were chosen in a similar fashion as the individual property research and took vacancy information from areas where the 18-20 year old demographic consisted of more than 10% of the total population. The vacancy rate data for these college-specific blocks was compared to citywide vacancy data in order to attempt to demonstrate the former blocks’ volatility.

To find individual property rental listings, the real estate website Zillow.com was utilized. Zillow uses both user-listed advertisements as well as data from public record sales and other websites to compile intricate property information lists. Although a limited number of properties have extensive Zillow profiles, those that do have historical rental listings and rent price changes. These historical rental listings and changes were retrieved and analyzed for this post. Zillow has basic information on all properties, but college neighborhood properties with Zillow profiles often contain these rental rate data points.

Analysis

In the vacancy rate exercise, census block vacancy rates from 2010 and 2012 were retrieved. The Madison and Iowa City data both consisted of nine census blocks, whereas the Champaign-Urbana and Minneapolis data consisted of twelve and ten census blocks, respectively.

In every city, vacancy rates increased from 2010 to 2012 as new student apartments opened, whereas the average vacancy rates for the city stayed relatively consistent. The vacancy rates for the student blocks were all lower than the city averages in 2010, but in 2012, three of the four studied blocks averaged higher vacancy rates than the city averages. The outlier in this trend — Iowa City — had less development occur in the two years due to neighborhood opposition; however, student block vacancy rate averages increased to a rate only one-tenth of a percent lower than the city averages by 2012, further validating the overall trend. The two outlying census blocks in the Minneapolis analysis where vacancy rates decreased between 2010 and 2012 were areas where new student housing was constructed, and therefore likely impacted the lowered vacancy rates. These rates for 2010 and 2012 are listed in the green rows, and are compared to the citywide vacancy averages in the blue rows.

Screen Shot 2014-12-14 at 9.14.13 PM

Screen Shot 2014-12-14 at 9.13.52 PMIn the property-by-property rental pricing analysis, a total of 49 units were found in the student neighborhoods near the University of Minnesota. Thirteen units had 2013-2014 rental data, 45 units had 2014-2015 rental data, and 10 units had data from both school years. The dwelling units mostly consisted of single houses and subdivided duplexes, with a few apartment unit listings in older buildings. No apartment listings from the newer, luxury-advertising buildings were used. Units were considered leased when the rental was no longer listed as available on Zillow. Rental prices from the 2013-2014 and 2014-2015 school year were utilized to compare the full effect of new-build student housing near the University’s main campus. The analyzed properties are marked in red on the maps below.

como

marcyholmes

Como & Marcy-Holmes Analyzed Properties (Map Source – City of Minneapolis Neighborhood Maps)

In the 2013-2014 school year leasing season, units were usually rented at their original listing price. Eleven of the 13 units listed in 2013 were leased at their original price; however, 2 units decreased their original listing price before the listing was taken down. In the 2014-2015 leasing season, more aggressive rental price reductions were observed. Out of the 45 researched units, 20 decreased their rental prices before their respective listings were taken down. The average rental price of all studied units decreased from $1,915/month at initial posting to $1,806/month at final posting. For the units that did drop price, rental listings decreased from $1,842/month to $1,563/month. This equates to a 15.2% decrease on rent — an almost $300/month reduction from the initially advertised price.

Screen Shot 2014-12-14 at 9.19.29 PM Screen Shot 2014-12-14 at 9.19.18 PMConclusion

It was predicted that, due to the large and rapid influx of new student housing units infiltrating college neighborhoods, that a unique population-controlled housing market would arise, and rental prices would decrease in older housing units while overall vacancy rates in the areas would increase. Although much of the data is very new, the values retrieved have confirmed this initial hypothesis.

Unlike traditional gentrification situations where increased housing units and density attracts more population, the studentification only attracts a specific, already present population and skews the surrounding market. The rooted student neighborhoods don’t appeal to non-student populations, and therefore do not attract any age-diverse growth to the area. Therefore, the only population that sees the area as viable are the students themselves, which are limited by enrollment. In fact, at the University of Minnesota, the total enrollment has actually decreased from 56,338 full-time students in 2010 to 55,717 full-time students in 2014, thus further portraying a major population attraction issue.

The vacancy rate census block data for the three other collegiate cities also confirms the notion of strict population supply. A basic supply and demand economic principle arises as the supply of housing increases and the population stays constant. Taking the census blocks as a whole, growth will likely only be seen in larger tax bases, as the newer student apartment buildings likely generate more taxes for local governments than decrepit homes.

There is room for growth, however, specifically to the University of Minnesota and other traditionally large commuter-based campuses. Since the construction boom moved faster than evolving lifestyles, and professionals like Kelly Doran and University of Minnesota officials see a shifting attitude towards living near campus, there is likely still room to attract students who would otherwise be commuters. This will likely be a long-term adjustment as more traditional commuters seek the advantages of living closer to campus over time.

Nevertheless, the college neighborhoods will prospectively only attract students, and a housing saturation point will be reached in close conjunction with enrollment and surrounding stock. This means that college-based cities like those studied in this report will reach saturation more quickly, and future student housing will not be as attractive as it has been recently.

Necessary assumptions were made in this report in order to find conclusions, and would take further investigation to confirm. The assumption that leases were signed at the most recent Zillow price was needed in order to illustrate the trends, but true rents could vary from that value. The dataset is also not fully indicative of the surrounding neighborhoods, as only 49 properties could be studied out of potentially hundreds of rentals available. The impact to overall property values and respective home sale prices also demands further research, as it was not addressed in this post.

Still, the data that was discovered is revealing. As discussed in the literature review, the high premiums seen in the luxury housing market are very likely not borne by the students themselves, but rather by a third party, like parents or relatives. It would seem that since many students are indeed choosing to live in these newer apartment buildings, that the hyper-localized pricing structure does not matter for money-bearing parents, and therefore see the new builds and vast amenities as a positive for their college-aged children. In an ironic consequence, those students that desire living in a low-amenity house with other roommates reap the price benefits of other students choosing to live in new buildings. It seems that, in fact, the new student housing projects and the youth that live in them actually lower the rent cost for other students, making living near campus more affordable on average.

Note: This post was abbreviated from my senior paper submission to the Urban Studies program at the University of Minnesota. I say abbreviated because, yes, the paper itself was actually quite a bit longer.

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63 Responses to The Curious Case of Luxury Student Housing

  1. Matt Steele
    Matt Steele December 15, 2014 at 9:24 am #

    Despite facts and numbers, some people will continue to hate on luxury apartments (and by extension, in the aggregate, suppress housing supply and decrease affordability for all income groups) because they are reacting out of emotions of envy of what they don’t have, or jealously to preserve what they have the way it is, or whatever else. It’s truly sad to see people who claim to champion increasing affordable housing actually making the problem worse despite thinking they are helping.

    Great article. I’m curious to see how Marcy Holmes and Como evolve over the coming decade or two. Marcy Holmes could transition to being more an extension of DTNE than Dinkytown, though Como may struggle more. Hopefully the housing stock can be improved and maintained to become more appealing to non college students.

    • Chris Iverson
      Chris Iverson December 15, 2014 at 9:33 am #

      Your Como comment would be very interesting to look more into. I would love to see a long-term (decades long, possibly) analysis of home values in this neighborhood and see if a full circle effect of studentification and de-studentification takes place. My prediction is that as home values decrease and landlords sell, it will attract more middle class families/individuals looking to purchase a home in a good location. It will be a dip and then an upswing as the neighborhood transitions back to being owner-occupied.

    • Wayne December 15, 2014 at 1:00 pm #

      Your point about the knee-jerk hate of new development is spot on. I was once guilty of hating on gentrification and new development, and now I’m guilty of hypocrisy for moving into new construction. But that said, people who fear the yuppie-influx do have a bit of a point as most of the people in my building seem to be incredibly self-centered and privileged. I feel like I don’t fit in because I had to go through hardship in life before I got to where I’m at and all these people seem like it’s been handed to them. An influx of people like that probably *would* ruin a neighborhood. But it at least keeps them (and I guess me?) from monopolizing the affordable housing stock. That’s how I rationalize ‘selling out’ to myself at night.

      • Scott Shaffer
        Scott December 16, 2014 at 5:21 pm #

        “…most of the people in my building seem to be incredibly self-centered and privileged.”

        I hope you don’t think that all homeowners are humble. I know some who own >$500k in real estate, hold candlelight vigils for inanimate objects, and put signs that say “IRREPLACEABLE” in front of their homes.

        But secondly, this is a wealthy country. A lot of people haven’t gone through significant hardships. Assuming we can’t force everyone to endure hardship so they build a suitable amount of character, we can either allow fortunate people to live in the center city or push them all out to the suburbs.

        • Nathanael December 21, 2014 at 12:43 am #

          In practice, wealthy people who live in the center city behave better. It’s a matter of whether they ever *meet* people who are less wealthy.

          Wealthy people who never talk to anyone who isn’t wealthy, who live in a bubble, get *weird ideas in their heads* and end up being dangerous political cranks pushing crackpot, self-destructive economic ideas with huge amounts of money behind them. They start imagining that poor people just choose to be poor, for instance.

          Wealthy people who rub shoulders with less-wealthy people stay a lot more grounded in reality.

  2. freealonzo December 15, 2014 at 9:27 am #

    Two items.

    First, there is some evidence that students from Augsburg, Hamline, and other St. Paul colleges are moving into the UMN private student housing market. Not sure how that fits in your analysis. Also I’ve heard that the new Huron development is trying to market to non-students as well. (good luck with that!)

    The second is a piece of real world data. My son lives at FloCo (10th and University). They were already looking for housing for the 2015-16 school year, including the older smaller, traditional duplexes and homes in Dinkytown. What they found was that the older housing stock was charging rents similar to what was being offered at FloCo. In fact, with “early bird incentives” from FloCo, like free Wi-fi, the overall cost to live at FloCo was cheaper than anything they could find in Dinkytown. Now FloCo has a little cheaper rents than Bridges and the Marshall but I was surprised the older stock wasn’t more competitive.

    Given lousier housing stock, additional utility and wifi costs, and lack of security vs. newer apartments. I think students are looking at the entire cost of rent and choosing the newer housing over older stock. The older traditional housing stock will need to lower their rents significantly in order to attract today’s student.

    • Chris Iverson
      Chris Iverson December 15, 2014 at 9:36 am #

      Thanks for the comment.

      1) I wasn’t able to analyze population types in this, but it would be interesting to observe the growing marketing scope of some of these new housing properties.

      2) This is a great point, and I think one that will come into play as more housing stock is available. The highly competitive luxury housing market may have to lower rent prices or offer more of these “early bird” deals to bid out the other apartments. I wouldn’t be surprised if an annual bidding war occurred like this (its already kind of happening).

    • CK December 15, 2014 at 5:50 pm #

      Interesting point.
      2 things though,
      1- FloCo is in Dinkytown.
      2- The renovation and expansion of FloCo (Florence court) did cause the rents at that location to go up significantly. Many of the people who were forced out were long term non student renters.

      I’m glad to hear that your son and friends have a place to rent that they find reasonable.

  3. Alex Cecchini
    Alex Cecchini December 15, 2014 at 10:10 am #

    This came up ages ago in an UrbanMSP/streets.mnForum thread, but I wonder how much of the areas around the U are lived in by recent-grads/20-somethings? I lived in MH for 2 years after graduating, and I know many others who did the same. I would expect the share to vary as you move gradually away from campus, obviously. For example, the Prospect Park neighborhood (south of Univ) has quite a few traditional SFHs, but also student renters. I’d imagine the planned neighborhood surrounding the LRT station will be a very solid mix of young professionals and students. The same could be said as you travel east along University/4th toward NE.

    Student demand may be capped (to a certain extent, maybe other school’s students are finding it reasonable as noted above), and I’d wager that a 1/2 mile walk shed around campus entrances would be 90%+ students, but I have to believe aggregate area demand isn’t necessarily capped. Thoughts?

    • Matt Steele
      Matt Steele December 15, 2014 at 10:50 am #

      Yes. I nearly lived in some Stadium Village / Prospect Park student housing right after college (ended up in a traditional apartment that was primarily students) and I had quite a few non-college friends who lived in Jefferson at Berry behind KSTP. These places were appealing to recent grads looking to live with roommates 5-7 years ago, and I doubt that has changed.

      • Peter December 15, 2014 at 11:28 am #

        I STILL live in the apartment I lived in during college, about 3/4 a mile from the edge of campus, 5 years after I finished school. Though I work at the U and my wife is getting her PhD there, so maybe I’m an outlier in that regard.

        • Chris Iverson
          Chris Iverson December 15, 2014 at 12:09 pm #

          There might also be a point in the future where more alums want to live closer to campus, but not necessarily directly next to it. Depending on that level of interest, new non-student housing might be built in outlying areas in Prospect Park and Como, but not before the pre-existing stock is reclaimed by owner occupation.

          • Matt Steele
            Matt Steele December 15, 2014 at 12:18 pm #

            Chris, you’re still making a bright line distinction between student housing and non-student housing. I think the point of these anecdata is that the distinction is true in a generalized sense, but “student housing” has appeal to non-students as well (especially recent grads with roommates).

            • Chris Iverson
              Chris Iverson December 15, 2014 at 12:52 pm #

              That is a good point, but I feel like a recent alum population would almost be considered a student population rather than owner occupied in an analysis like this. I also have an inclination to think this recent alum population living near campus is fairly small (Contrary to comments here), but I could be totally wrong in that regard.

              Aside from that, there will definitely be some mixing of students and non-students in many of the non-luxury apartments on the campus fringe. There were some interesting scholarly articles that I looked at (and didn’t include in this post) that studied the effect of students in formerly traditional apartment units. What they found was that once a critical percentage of students was reached, long-term tenants bolted and it quickly transitioned to being almost entirely student-leased.

            • Cedar December 15, 2014 at 5:50 pm #

              I used to work in Prospect Park, as well as spent a fair amount of time either on or traveling through campus. I often thought that the staff and faculty at the U — as well as people like me, who just like the bustling, urban environment in the area — would be prime candidates for some of the adjacent apartment complexes. The apartments I’ve noticed, however, are so student-oriented that I don’t think they do appeal to non-students, as the advertising (and perhaps in some cases move-in date availability, etc.) are so oriented towards traditional students that it would feel weird, kind of like moving back into a freshman dorm. I’ve wondered if some of those new apartments, like the ones on Washington right near the LRT and the hospital complex, might have done better to situate themselves as distinctly NON student in focus; then maybe they’d have a better shot at getting all the people like me, along with the students who may also find it more appealing to live in a more mixed age/mixed occupation building.

              • Joseph Totten
                Joseph Totten December 15, 2014 at 6:52 pm #

                A lot of these apts, especially along Washington itself have sold themselves as professional and graduate school housing. Not sure how and if this was accounted for, but those buildings are (at least trying their damn-dest to be) not just student housing.

  4. David Markle
    David Markle December 15, 2014 at 11:13 am #

    It’s great that Mr. Iverson brought up this important topic. Less and less low cost student housing remains in the University area. I wonder about percentages of the new housing rents paid by parents and how much by student loans. In other words, maybe student loans pay for new construction.

    • Adam Miller
      Adam Miller December 15, 2014 at 11:50 am #

      “Less and less low cost student housing remains in the University area.”

      Maybe I didn’t follow, but wasn’t his conclusion exactly the opposite?

      • Chris Iverson
        Chris Iverson December 15, 2014 at 12:07 pm #

        Honestly, if you look at where these new apartments have been built, the answer is neither. The new units have replaced mostly vacant lots or small buildings, not huge swaths of pre-existing “low cost” student housing. The amount of non-luxury housing has remained more or less the same since 2010. The rental rates and vacancy figures fluctuate as you look at the aggregate number of units in the area.

        • Adam Miller
          Adam Miller December 15, 2014 at 1:45 pm #

          I was thinking that as well.

          The Marshall replaced zero housing units. The Venue replaced one single family house. The Bridges replaced a gas station (I think).

          I don’t recall for sure what was where FloCo is, but I think it was houses. Wasn’t the Knoll a smaller apartment building?

          Anyway, there isn’t much question that these buildings have expanded supply a lot.

          • Chris Iverson
            Chris Iverson December 15, 2014 at 4:14 pm #

            The Bridges replaced a vacant lot (formerly a Hardee’s). FloCo replaced a gas station. The Knoll replaced a church. No housing lost in those areas. The only places I can think of where new build replaced housing is 412 Lofts (replaced a mid-century apartment building) and the under-construction Radius (replaced about 12 nice-looking row townhomes).

            In addition, pretty much every new apartment building since 2010 has been built on former vacant lots, car shops, strip malls, or Arby’s. The only “sad” loss was the Oak Street Cinema where the Edge on Oak now is, but that theater was shuttered a year before it was razed and again, didn’t replace any pre-existing housing.

            • Joseph Totten
              Joseph Totten December 15, 2014 at 6:54 pm #

              Venue (the not Target Express one) had a old SF house on it, which had 2 units and a hair salon inside. Might have been an additional house I’m forgetting as well…

            • CK December 15, 2014 at 7:05 pm #

              Hey Chris. FloCo renovated and replaced a large block of very low cost housing with much more expensive hosing. A large amount of low cost housing was eliminated here. There are many other examples of this. Yes total supply is increasing but the lower end price is going way up.
              I suggest you check permit records, and other sources rather just going off of what you can think of.

              • Alex Cecchini
                Alex Cecchini December 16, 2014 at 7:59 am #

                I’m confused, so now new development that retains and renovates old townhomes (some of the oldest in the city), replacing only a gas station and one house in the process, is a bad thing?

    • Bill Lindeke
      Bill Lindeke December 16, 2014 at 8:28 am #

      When I’ve asked students what they pay for rent over the years, I’ve always been surprised at how expensive it is. This idea that places like Dinkytown are low cost isn’t really true relative to other rental neighborhoods around the city..

      • freealonzo December 19, 2014 at 12:11 pm #

        This is a very good point. The general population thinks one can live in a crappy Dinkytown duplex for $200 a month. Like I said above, my son found that rents in new v. old were pretty compatible throughout Dinkytown and once you throw in stuff like free wi-fi, furnishings, security, etc, was actually a better deal.

        • Alex Cecchini
          Alex Cecchini December 19, 2014 at 1:24 pm #

          I dunno, I lived in a 10 BR house at 7th and 15th (now torn down for the Radius) where everyone but two people had their own BR for 2 years. Rent was $300 and included utilities/sewer/garbage. We split internet/cable ($100/mo) between the 11 of us. 11 college guys can scrape together couches, tables, chairs pretty easily, some of it not even all that terrible. We had one break-in the second week of school in the first year, had a PS2, Wii, and a pair of shoes stolen (because someone left and didn’t lock the door). Never had another issue. Moved in fall of ’05.

          At the time, newer apartments (Bierman, Marcy Park, etc) were still more, and you split a room (which isn’t a travesty, I was one of the room sharers for a year), and you had less common space than we did (had a full basement for foosball, media room, etc).

  5. David Markle
    David Markle December 15, 2014 at 2:00 pm #

    Perhaps “less and less” should be “relatively less and less.” In the West Bank area that I know best, it’s clear that almost all of the housing available to students–much of which had carried low rents–got eliminated by redevelopment and rehab that excludes full-time students under rules of federal financial subsidy. The only noteworthy addition of student housing there was Grand Marq on Cedar and Washington: not luxurious but in my view hardly an example of low cost housing. I don’t know whether units in the new building across the street from Grand Marq are available to students, but it’s not a building specifically intended for students and I doubt that the rent is low.
    An example of a developer creating new student housing, then turning over ownership or control to another entity, is the large stick-construction “Jefferson” off University Avenue behind KSTP. I don’t know whether the new financial entity is controlled by the original developer (Jefferson Companies, present Commissioner of Transportation Zelle’s concern) or is a truly new owner, nor do I know whether rapid depreciation schedule, considerations related to possible governmental financing such as tax shelter schedules or other factors led to the changeover strategy.

    • Adam Miller
      Adam Miller December 15, 2014 at 3:00 pm #

      Okay, but again, the building across the street from Grand Marq (7 West Apartments) replaced an empty Grandma’s and half a parking ramp, so it’s entirely net gain in housing stock.

      And while I don’t recall what was where GrandMarq is now, it certainly featured far fewer units (or at least had a far smaller footprint).

      Otherwise, when I was a West Bank-based student in the 1990s, I don’t really recall that there ever was much “student” housing on the West Bank, aside from Middlebrook Hall.

      Regardless, adding housing where there was none is not reducing low cost housing options, relatively or otherwise, and, as Chris’s research results shows, potentially actually increases them.

      • CK December 15, 2014 at 5:32 pm #

        The expansion if the U of M and Augsburg eliminated many blocks of low cost housing in cedar riverside. This was in a similar time frame to the projects like grand mark. The dance and art building, at the u recently, and whatever the project is called that Augberg is doing currently. on 6th st and 20th avenue. In cedar riverside there has been a net loss in housing units over the past 15 years, even with new construction.

        • Adam Miller
          Adam Miller December 16, 2014 at 9:48 am #

          There was not a much (if any) housing eliminated by the dance and art building.

          But yeah, I can see the presence of three large institutions (U, Fairview Riverside and Augsburg) as displacing overall housing in the area.

  6. Evan Roberts
    Evan December 15, 2014 at 2:16 pm #

    Great post, data on a topic about which there is much emotion and anecdote.

    The line between student and non-student housing is pretty permeable, and really a matter of advertising and reputation. As I keep telling PPERRIA meetings it’s not like college students are Lilliputians who have different sized kitchen counters.

    I know of a couple of adults in their 50s who are living at Oak and Washington (forget which building). They wanted an apartment close to campus and the light rail, and to not have to shovel anymore.

  7. Alex Cecchini
    Alex Cecchini December 15, 2014 at 4:03 pm #

    Well, $luxury is just a marketing term the apartment complexes use themselves, and we should maybe try to avoid using it to describe “new.” Sure, most buildings have granite, cheap SST appliances, exercise rooms, party rooms, etc. But on the whole, those costs are very marginal in the total construction process, and removing them wouldn’t affect rents much at all. They do it to have a slight edge in marketing their product vs older places and to justify charging rents that cover initial financing costs of brand-new construction.

    And besides that, these for-profit places aren’t charging much more (sometimes less) per bed or bedroom than new construction not-for-profit housing (Riverton’s new building going up will charge the same, sometimes more, per person as Opus’ The Venue, for example).

    Maybe we should ask why debt is made so easy to obtain by students? Perhaps government policy of cutting funding to schooling and letting gov’t subsidized loans pick up the slack was bad policy as it encouraged student borrowing…

    • Chris Iverson
      Chris Iverson December 15, 2014 at 4:10 pm #

      Hold on for a second… before we delve into the student debt conversation, its important to note that there is very little data out there that shows debt being used to finance new student housing rents. However, there are many instances of interviews where surveyed students state “my parents are paying for it”.

      Don’t assume that loans are paying for these units, but do assume that parents are taking the bill (at this point, until data possibly proves otherwise).

      • Alex Cecchini
        Alex Cecchini December 16, 2014 at 8:11 am #

        You are right, there is very little data supporting it. I think the whole student housing boom (which isn’t limited to only UMN in its transition away from a commuter campus) phenomena is fairly recent and data will be scant until maybe another 5-10 years.

        I’m making pure conjecture. Yes, the U has tightened admission standards but held enrollment fairly steady. One result is that the share of students from wealthier families has definitely increased in the last 10-15 years. So it’s very possible this scenario could be playing out: former commuter students tight on cash are moving into low-rent apartments/houses on the fringe formerly occupied by students with more family wealth who are now taking residence in new/$luxury apartments. Parents are paying for their housing, just more.

        But I would guess that there’s at least a little spillover of lower-income students with access to cheap debt justifying higher housing costs because 1) they’re kids, 2) they want to live with their friends who are dead set on a new apartment (or, their parents are). Again, pure conjecture, though I have seen studies from the early 90s and early 2000s showing student willingness to take on debt to pay for non-education costs.

      • Nathanael December 21, 2014 at 12:39 am #

        It’s worth pointing out that parents don’t usually volunteer to pay for gasoline, so from a student’s point of view, ditching the car and getting a fancier apartment may be financially beneficial.

  8. David Markle
    David Markle December 15, 2014 at 5:42 pm #

    West Bank housing available to students diminished sharply in the 1980-1990 period; previously there was quite a lot. As to the East Bank, one obvious change over the past decade is the big increase in students from Asia, many of whom appear to live near campus

    I regret the fact that a University education has become quite expensive, in no small part because of housing costs..

    • Nathanael December 21, 2014 at 12:38 am #

      After analyzing the drivers of the cost of university education in the US, they are:
      (1) cuts in state funding (previously state funding to state universities was specified for the purpose of keep tuition rates down)
      (2) severely bloated numbers of overpaid administrators (same disease affecting corporations)
      (3) tendency to build ‘cathedrals’ and ‘pyramids’ rather than making do with existing functional buildings; all spare donations go to buildings for donors to put their names on, never to actual teaching

      Everything else is quite marginal by comparison.

  9. David Markle
    David Markle December 15, 2014 at 5:51 pm #

    Trends in rents, property values, enrollments, etc. in the controversial situation around St. Thomas University deserve study.

    • Joseph Totten
      Joseph Totten December 15, 2014 at 7:00 pm #

      This is a whole thing unto itself. Neighbors complain about parking, shoot down a parking ramp, neighbors complain about kids living in neighborhoods, shoot down new dorms and apartments… Something has gotta give and I really don’t think that portion of homeowners in Mac-Grove has figured that out yet.

    • Bill Lindeke
      Bill Lindeke December 16, 2014 at 8:25 am #

      Yeah, the city’s study from last year wasn’t really adequate, which is one reason why I voted against the ordinance on the Planning Commission. Regardless of how you feel about town/gown issues (read: drunk Tommies), I believe there are unforeseen consequences to the kinds of restrictions that St. Paul put in place.

  10. Bill Lindeke
    Bill Lindeke December 16, 2014 at 8:19 am #

    As someone who’s taught many Geography courses at the U, this paper is great! Plus I’m convinced by your argument. I wonder if a neighborhood like SE Como are as homogenously ‘student’ as you suggest, or if spaces that were previously student occupied might become less homogenous if prices continue to go down? For example, I lived in a “Macalester house” for a year on Grand Avenue a few years after college. There were 5 of us unrelated adults, but I had an extremely cheap room and didn’t mind sharing kitchen and living space with my friends. In fact, I enjoyed it a great deal! Plus the cheap rent literally saved me from living in my mothers’ basement while I searched for a career.

    Anyway, I think the U of MN neighborhoods might be a bit too close to campus to have the attraction of Grand Avenue and Macalester, but maybe not. I think the problem has long been that the kinds of older student apartments were way too expensive relative to the rest of the rental market, that the only way to justify the added cost was if you were attending full-time school at the U.

    Great topic, and well done! Lots of questions for further research.

    • Bill Lindeke
      Bill Lindeke December 16, 2014 at 8:34 am #

      PS I bet this is more feedback than you got on this paper from your prof, eh?

    • AE December 16, 2014 at 1:23 pm #

      Como is definitely not a homogenous student neighborhood. I lived on 17th Avenue SE, just down the block from the Muslim community center, where there were always Somali women and children milling about. I noticed a decent number of working- and middle-class neighbors as well.

      One fun anecdote: A friend who works at the U told me she was talking to the student worker she supervised about student housing. The girl lived in one of the new places that went up. She asked, “Where did everyone live before these places?” My friend replied, “We lived in Como.” The girl looked aghast and said, “That’s so far away!”

      I imagine with more supply in Dinkytown, you’ll see more people sticking very close to campus (and maybe–just maybe–shedding their cars), with more families willing to move to neighborhoods like Como. It’s a pretty fantastic location with a bus line or short walk/bike ride to the U. Shopping either in DInkytown or up by the Quarry. With some TLC, some of the houses up there could be gorgeous. But right now, they appeal to students seeking cheap rent and the ability to host house parties.

      • Wayne December 16, 2014 at 4:05 pm #

        Como is definitely pretty diverse in pretty much every way you can define the term. I think the railroad tracks segregating it from the rest of the ‘college area of influence’ will help it bounce back to being a lot less student-oriented and more like the western edges of marcy-holmes that abut NIEBNA. It’s nice and close to stuff, but not *next* to it.

      • Joe December 16, 2014 at 9:43 pm #

        It’s possible she was a St. Paulite or from an eastern suburb and thought of Como as the St. Paul neighborhood, which is quite a ways from the U.

        • AE December 17, 2014 at 9:36 am #

          That wasn’t the case here. She was a second year student who lived, I assume, first in the dorms, and then moved to Dinkytown.That’s not the only time I’ve heard stuff like that. SE Como is increasingly becoming mentally far away in the same way that parts of Prospect Park are.

          Out of sight, out of mind. If your friends all don’t live there, is it even on these kids’ radars?

          • Cedar December 18, 2014 at 4:01 pm #

            Although ironically at the same time, I think that Prospect Park is starting to feel much closer! When I was at the U in the late 90s, I lived in a dorm in the super block for two years, and briefly worked at Pratt school in Prospect Park. I generally walked to work, then took the bus home. It felt like a trek. More recently, I once again worked in Prospect Park, but already the areas are far more connected with more retail and housing, and of course now the Green Line makes Prospect Park feel much closer.

  11. David Markle
    David Markle December 17, 2014 at 7:22 am #

    A friend who has taught college classes forwarded these comments:

    Near campus housing is another example of the financialization of everything. The main question is how to suck more money out of student populations.

    A discussion of room-mating is needed. What supports high rent in these projects is the willingness of students to share space. Rent per apartment compared to rent per person and the value of having one’s own space. I have some doubt about the benefits of crowding students together like this. It works for some foreign students grouped together where there is less partying and more study. Even in that case, my experience teaching was that the students did not work independently enough.

    • Casey December 17, 2014 at 10:19 am #

      I work at a small college and know that many of our students live 4 people per one bedroom apartment.

    • Adam Miller
      Adam Miller December 17, 2014 at 10:20 am #

      “Crowding students together like this.”

      Has there ever been a time when students, like other people of limited means, haven’t “crowded together” to save money? Isn’t that the very definition of a dorm?

      I’m really struggling to picture your notion of preferable student housing, but the image I’m getting is a lone student in a run down studio and that’s pretty depressing.

      • Chris Iverson
        Chris Iverson December 17, 2014 at 1:28 pm #

        I’ll have to agree with Adam here on this. Although there is a population of students who prefer the “lone” lifestyle, but the majority of students don’t mind and, in some cases, want to room together. I’d estimate 90% of the incoming UMN freshman share a dorm room (sometimes up to 4 people per room), and a good portion of students share bedrooms either in the dorms or in apartments during sophomore year too.

        That’s not to say that students rent out their own room sometime in college. I shared a bedroom my freshman, sophomore, and senior year, and had my own room junior year.

        As far as the financialization of students goes, I would agree; however, wasn’t that the case pre-luxury student housing? I have a hunch that most of the college house landlords are “in it” to make some money off of their rents. Not all housing can be non-profit (and like Alex said, even non-profit housing around the U tends to be similarly priced compared to the for-profit units).

        • Matt Steele December 19, 2014 at 11:24 am #

          Agreed 2x. There’s a reason why so many recent grads stay living in these types of arrangements even after they graduate and land well-paying jobs… they like the living arrangement! I loved living with roommates, even though I could afford a “solitary” arrangement, but I wanted the built-in social arrangement that comes from having friends as roommates.

          Not to mention that it is a much stronger way to launch oneself financially… Spend $500-1000/mo for a shared living arrangement instead of $1000-1500+ for a solo place, and that could easily be $5,000+/year in purchasing power that can be redirected towards accelerated student debt repayment or actual wealth building purposes.

          • Nathanael December 21, 2014 at 12:35 am #

            I would have preferred a communal arrangement myself (still would), but my friends and I ended up in different cities, among other things…

      • Casey December 17, 2014 at 3:07 pm #

        Please keep in mind dorms are not the same as apartments. Plus many schools have a shortage of dorm rooms that are priced differently that monthly apartment rents. If a student rents an apartment over COA (cost of attendance) it will not be covered.

        • Adam Miller
          Adam Miller December 17, 2014 at 3:45 pm #

          What is the difference between “crowding together” in a dorm vs doing so in an apartment?

          Why is either a policy problem anyone other than the students should be worried about?

  12. Casey December 17, 2014 at 4:00 pm #

    Not sure I understand your question about “crowding together” or “policy problems”, but we have had students withdraw from school when they have not been able to get into the dorms as the cost of attending school and renting an apartment is not-affordable. This not only hurts the students education but also hurts the school. Many landlords near our school know that in the fall many students are looking and will raise rents or some will require a parent to sign the lease. Our housing department does try to work with landlords that are reasonable about treating students fairly.

  13. Nick Magrino
    Nick Magrino December 17, 2014 at 11:45 pm #

    I think I technically lost an argument about this on the forum, but another thing to consider when comparing prices and rents and such is how crazy expensive (to me) actual university-owned housing is:

    http://www.housing.umn.edu/cost

    That’s nuts. To split a not huge double room and share a bathroom with 20+ other guys in a fifty year old building like Territorial from late August to mid December, it’ll run ya $2460. Not including the mandatory meal plan, which I miss dearly, but is also purdy darn spendy–we did the math once and it’s like $9/meal. Also, you have to find somewhere else to stay over the month-long Winter Break, and schmucks like circa 2009-2010 Nick will ruin your night if your bass is too loud. The economics of on campus housing are a little different (i.e. there are none ???) but there’s gotta be a story in there somewhere.

    • Chris Iverson
      Chris Iverson December 18, 2014 at 7:59 am #

      Probably because of all the cups stolen out of the dining halls, that’s my guess.

      But you do actually have a really good point about dorm costs. I think more than anything it sets a seriously overpriced precedent for living expenses throughout college. If an incoming freshman does some basic math, he/she will say “Okay, over 4 months I’ll be paying about $500/mo to share a room, dining plan not included.” Then, when he/she moves out of the dorms, they look at these new apartment unit prices and say “Okay, over 4 months I’ll be paying about $550/mo to share a room, so a little more than the dorms, BUT I get all these fancy amenities OMG!”

      I wonder if the U lowered their initial dorm semester cost, students would be as willing to seriously consider luxury units for the rest of college.

  14. Nathanael December 21, 2014 at 12:33 am #

    Most students are consistently broke nowadays, thanks to student loans; they may have cash, they may have credit, but they have no net worth.

    If you’re in this position, you may actually start adding up the costs of commuting to college, including the fixed costs of having to own a car. If you’re commuting from your parents’ home with free rent, it’s probably still a good deal. But if you aren’t, even an expensive luxury apartment may be cheaper — and nicer at the same time.

    Most people don’t add up their commuting costs. I think students may be an exception.

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