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.
Zaragon Place, with 248 beds, was one of the first high-rise student projects in recent years, opening in the fall of 2010.
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.
Six11 will bring 343 beds to East University in the fall of 2018.
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.
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I like how you wrote about the demand and why it’s gone up. Nicely written and nicely done. I do have a question about this particular portion: “”The characterization of these developers as being profit-motivated” I could see the University housing not being motivated much by profit, but development usually only happens if there is profit to be made for people. So, if you have any further on this particular matter, then I’d be interested in hearing your thoughts.
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Anecdotal comment on student housing in residential/family neighborhoods.
Since students have crept into our neighborhood via rental houses, we have noticed a few things. They bring with them all the problems you would imagine – noise at any /all hours, football Saturday outdoor parties with plenty of loud trap music, shouting and foul language, and a general lack of upkeep of the property. Are these (some would say) minor aggravations enough reason to reject massive doses of same that a “Barton Green” project would bring to the area? Depends on who you ask.
Ask the neighbors, they will and have said yes, reject this project. What price can you put on quality of life? Ask the developers they will downplay the troubles, by fudging traffic studies, lying about the potential uses (these 4-5 bedroom units are for families they say) – because they are making money – lots of money – off our reduced quality of life. They say no problem. Ask the city council, they will go with whatever brings them the most tax base to squander. In the same way that we seem to have no influence on the U of M’s growth rate, which as you point out is driving demand for radical changes to our skyline, we have no influence over a city council that says Growth At All Costs. In short, we’re screwed.
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There seems to be quite a disconnect in this comment. On one hand, you seem to hate students living in rentals in your neighborhood(and I can certainly understand where this belief comes from). However, the one major way to fix this is to house students in dense high-rise buildings closer to campus so the neighborhoods can return to being neighborhoods again. You can’t be both against students living in your neighborhood and against student high rises, because it’s not a situation based in reality.
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Well now that the greeks have been told to stop raping each other, we will see what happens with enrollment. I would not send my daughter here, no matter how many games Jimmy Hardbawl wins.
I am an RN at the UofM hospital, as well as a Grad Student in the School of Nursing, and honestly, this place has jumped the shark, like GM did about 12 years ago.
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Excellent article with real facts. I did not know about those occupancy rates. Keep it up, despite the environment of loud, assumption-heavy noise.
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You are leaving out the property owner of existing campus houses that have provided quality housing for decades not to mention decades of taxes to fund our city. Allowing out of town developers to continue to deteriorate our market shows a total disregard by our city leaders local business.
I challenge the projected number as another person commented I don’t see any homeless students.
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There are good landlords and bad but I think most would agree that the property owners in this town have done exceedingly well leasing to students over the years, more often than not providing less than “quality” housing.
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Ryan, are you a landlord? Or have you reviewed landlords income statements? FWIW – I have not done exceedingly well (I own a very well maintained 100 year old house in Kerrytown). I did not take cash out for the first 15 years of owning the property, and only after 20 years ownership have I been able to fund the annual maintenance costs without taking out loans. There was a period about 15 years in where I would have done anything to have gotten out of the business due to the changing dynamics of dealing with students who were starting to act like individuals with individual needs (vs. the previous “group” mentality) as it increased the work load (think five leases vs. one per house and all the extra communication involved – including emails to me about the plans of their very own housemates, as if they were strangers to one another despite their proximity) — but the economy was down and I would have only recouped the outstanding loan costs and sales costs and walked away with a little in equity growth (but once divided by the 15 years of sweat equity – just very sad, disheartening). I won’t see the touted “gains” until the loan is paid off in another 15 years – so I really have to hold it until then. I’ve worked a “regular” job most of these years – I’ve sacrificed my evenings and weekends to manage the books, the tenants, and the property. I’ve dealt with hefty judgements from tenants that I’m wealthy at their expense and supposedly this has justified some incredibly nasty behavior, emails, etc. I’m occasionally threatened with a lawsuit (more frequently now and usually coming in the way of: ‘my parent is a lawyer and you will be hearing from them’), which almost allways are due to a misunderstanding stemming from the tenant never really having read the lease for a complete understanding of our contractual business agreement. The saddest thing I’ve lost with this decision of mine to acquire a rental property to fund a pensionless retirement plan, is the ability to have a summer vacation with my family (who are now grown and gone); 25 years of sweat and pain and long, long days of cleaning up – August vacations were never taken. So yes, I am making money (primarily through equity) but won’t see it until it’s sold. It will represent a portion of my retirement portfolio; hopefully I won’t be a burden on society for my healthcare and other needs as a senior — but I don’t see the gains as doing “exceedingly well”, rather as payment for an adult lifetime of hard, hard work. I do lie awake at night hoping nothing catastrophic happens to a tenant, to the house (via a natural disaster, irresponsible tenant behavior, or eminent domain claims from a government) – because if this happens – the gains won’t have a chance to be realized by a sale (and that is still 15 years down the road for me).
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