When residents and visitors comment on the changing face of Ann Arbor they’re most commonly referring to the proliferation of high-rise student housing projects that have popped up along South University, Huron and Washington over the past decade or so. Too often these projects are misunderstood. In addition to my running commentary on the development of these buildings here in Ann Arbor, I work in the student housing business on a day-to-day basis (brokerage across the country) so I wanted to shed a little light on how they work, the supply-demand dynamic at the University of Michigan, and why they’re a necessary evil here in town.
First, it’s important to note these are private housing projects, built by developers and marketed towards upperclassmen students. The university maintains its own housing system, the bulk of which is meant for first year students, and it has also built new housing in recent years including North Quad and the Munger Graduate Residences. The private off campus buildings lease by-the-bedroom typically with parentally guaranteed annual leases and often in larger 4, 5 and even 6 bedroom configurations. The developers have been almost exclusively out-of-town companies and thus far all but Zaragon have sold their projects soon after completion. The characterization of these developers as being profit-motivated and not long-term stakeholders in our community is unfortunately largely accurate.
Second, love it or hate it, these buildings are filling a huge housing need. The first vertical student housing development in recent times was Corner House at State and Washington, which opened in 2003 with just 154 beds. Since that time the university has grown by 8,135 students. Between the university residence halls (1,080 beds) and all of the private development (3,730 beds), there has been approximately 4,810 beds added to the current stock in that time. Not even close to keeping pace. The flurry of new development looks to add an additional 1,241 beds in 2018 and a total of 2,384 over the next 4 years, still not keeping up with anticipated demand. We could argue all day about whether the university needs to or should grow but it has. If there are not new buildings to house students on or off campus, it presents an entirely different set of problems.
Lastly, if it’s clear that the students have to live somewhere, they can live near campus in mid to high rises, we can re-zone some areas a little further from campus for mid-rise development, or they can live way further out and commute in from garden style apartment complexes. To date, the vast majority of new projects have been vertical in D1 zoning areas within a couple blocks of campus. The exceptions would be The Courtyards on North Campus and the new project on Main Street, The Yard. A new development, The Cottages at Barton Green up on Pontiac Trail, would be the first commuter style complex in Ann Arbor although most universities have a plethora of this type of housing. I am generally opposed to this type of student project here in Ann Arbor, it encourages car ownership and places a concentration of students in residential neighborhood. However, it would provide additional much-needed new construction housing at a more affordable price point than downtown.
For those that question the need and demand for housing, feel free to peruse my company’s research report on the market:
The quick stats: university enrollment is 46,002, a new record, and the freshmen class of 6,847 is the largest in school history. Average occupancy across the market is north of 99%, the highest rate we have ever surveyed at a university. Rents increased over 3.5% year over year although demand for 4 bedroom unit types seems to be waning. All those new buildings? They’re all full. The worst occupancy was 96%. It’s pretty evident that the student housing market at the University of Michigan is extremely healthy.
What does that mean for the future? The university is likely to pump the brakes on growth in coming years, they’re essentially at capacity to house incoming students on campus. There seems to be a good chance that the university will explore building a new residence hall in coming years, the rumor is a larger replacement for aging Mary Markley Hall. Private development is likely to continue as well, mostly in the South University corridor but I’m hearing whispers of a new project on Washington as well. Students have to live somewhere, I believe the focus should continue to be on a dense projects near campus that dissuade car ownership with a renewed emphasis on quality building materials and design, and attractive, pedestrian-oriented ground floor retail and streetscaping.