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BloombergBusinessweek August 19, 2019landlords to find newrenters. It
seemsobviousnow,butBaylesswas
amongthefirsttorealize thatthere
willalwaysbemorestudentstoreplace
thosewholeave.Overthenexttwo
anda halfdecades,ACCputupluxury
studenthousingandrenovatedexisting
propertiesindozensofcities.ACCwent
publicin 2004 andby 2018 hadacquired
$5.9billionofproperty.
“ACCisdefinitelyoneofthegrand-
fathersof this industry,” says Ryan
Tobias,a foundingpartneratTriadReal
EstatePartners,a brokeragecompany
thatspecializesin“premier”privatestu-
denthousingandmultifamilyrealestate.
Awaveofsimilarlystyledcompanies
focusingsquarelyonhigh-endstudent
housingfollowed.TwoofACC’sbiggest
competitors,EducationRealtyTrust,or
EdR,andCampusCrestCommunities,
wentpublicin 2005 and2010,respec-
tively.EdRwasacquiredbyGreystar
RealEstatePartnersin2018.
The rise ofACCandits imitators
tracks with an overall increase in
student housing costs. Around the
1980s,statefundingforhighereducation
stoppedkeepingupwithinflation.This
leftuniversitieswithoutenoughcash
to fund new-housing construction,
or even sometimes to keep up with
basic maintenance on existing units,
according to a 2015 report by HUD.
“Universities used to see developers as
competition,” says Robert Silverman, a
professor in the University at Buffalo’s
urban planning department. “Now they
see them as a solution.” From 1989 to
2017, the estimated cost of on- and off-
campus room and board at a four-year
public university climbed more than
82%, adjusted for inflation, according to
numbers compiled by the College Board.
Rents across the entire U.S. climbed
only about 19% in the same period, also
adjusted for inflation.
How much responsibility REIT and
luxury developers bear for driving
up rents depends on whom you ask.
Developers and their allies say they’re
simply offering more places for students
where there are few options. But a
Bloomberg analysis of rental rates based
on census data shows a correlationbetweenthearrivalofluxurystudent
housingdevelopmentandrisingrents
nearUTAustin and the Universityof
Michigan, each of which hasparticularly
well-defined student housingareas.
Real estate managementcompany
CWS Capital Partners LLC wasone
of the first to build large-scaleluxury
apartment buildings in Austin’sWest
Campus neighborhood. From 2000 to
2010, the company built enoughunits
to house 2,000 students; inthattime,
median gross rents in West Campusshot
up more than 56%, to $1,040permonth,
more than double the 24%increasein
Austin as a whole during theperiod.In
another nearby neighborhood,North
University, which saw nonewluxury
construction, rents rose 32%inthat
period. CWS did not returnrequests
for comment. ACC beganacquiring
those properties in 2012. Itnowhouses
as many as 34% of the studentsinWest
Campus and as much as13% of UT
Austin’s undergraduate population.
The data from Ann Arborpaint a
similar picture. Most luxury housingnear
the university was built from 2010 to2016;
in that time, Ann Arbor censustractsthat
include REITs and luxuryapartment
buildings have seen their mediangross
rents rise 37%, to more than$1,400a
month. Rents in Ann Arborgenerally
have increased about 18%. In one
census tract adjacent to theUniversity
of Michigan, median grossrentsrose
more than $1,200 a year in2011,2012,
and 2015, coinciding with luxuryprojects
hitting the market built by ACC,EdR,and
a couple of local developers.Rentswere
flatin 2013 and2014.
Theareasaroundcampusesarebasi-
cally a constantly replenishingseller’s
market. When a large numberofpeo-
ple all want to live in the sameplace,
developers can name their prices.Many
universities, in trying tosolve their
funding shortfalls, have inadvertently
exacerbated the problem byadmitting
larger numbers of out-of-statestudents,
who pay more in tuition butwhoall
need somewhere to live—andwhoare
likelier to come from wealthierfami-
lies and able to afford fancierhousing.
When student housing developmentsrent by the bed, they can usually
squeeze more money out of a space
than if they rented by the unit, which
can further inflate real estate prices in
the area.
In Seattle, which is already deal-
ing with vertiginous rents, ACC owns
three properties near the University of
Washingtoncampusandplanstobuildat
leastonemore.From 2016 to2017,rents
intheso-calledUDistrict, a popular stu-
dent neighborhood, rose 15%; rents in
Seattle as a whole increased 6.3% in that
time. ACC also built a student residence
featuring a “state-of-the-art fitness cen-
ter” and “gaming lounges” next to the
University of California at Berkeley,
where affordable housing is in severely
short supply. UC Berkeley disputes that
the ACC building is a luxury facility; the
UW declined to comment.
Tonie Miyamoto, director of
communications for student affairs
at Colorado State University, says the
schoolhas a “housingmasterplan,”
which involves newconstruction of
affordableon-campusoptions.J.B.Bird,
a spokesman for UT Austin, said in
an emailed statement that housing
affordability for students is “of serious
concern for the university” and that the
school has “plans in the works to extend
aid for living expenses.”
“The university hears often from
students about the challenges of find-
ing affordable housing in Austin,” Bird
said. “The university is evaluating dif-
ferent steps to improve the situation
for students while working closely with
people and businesses in neighbor-
hoods nearby.”
In the meantime, many UT students,
especially those in East Riverside, are
frustrated. “It just seems wrong for us to
pay as much as we do in tuition, and then
if wewanttobeabletobenearcampus,
wehavetopayevenmore,”saysMary
OkonItrechio,anotherUTAustin stu-
dent who lives in Riverside. “You have to
come from a rich family, basically, if you
want to have the luxury of living near
campus and interacting with other stu-
dents more.”
The University of Michigan de-
clined to comment for this story, and