It makes sense Asset Plus SVP Ryan McGrath looks like he could be in college. His company is one of the nation's top five privately-owned providers of student housing. In the past few years, he tells us, there’s been an expansion of the field as investors moved to a sector they saw as recession-proof. (He says it’s not, but it is resilient.) Unfortunately, enrollment may have increased as predicted, but not in the colleges investors thought, and there hasn’t been a big increase in demand for privately run student housing. Asset Plus has 41 student housing properties in 19 states totaling 25k beds. It builds off-campus facilities when universities balk at amenities like huge pools.

Voila, a huge pool. In this case, at the Lofts at Wolf Pen Creek, a student housing development at Texas A&M. It was completed last year, and even though people were nervous about the timing, it’s 90% occupied at above market rates. It’s also already 53% preleased for next year. (The market average is 25%.) Asset Plus created a separate student housing arm, Asset Campus Housing, in ’98, which Ryan says has really taken off. Asset Plus is growing, too. Two years ago it had 432 employees; now it has over 1500. Ryan tells us he went hunting with some real estate buddies last weekend and Bisnow was a point of discussion. Glad we could come along!

Asset Plus Companies took a different stance on student housing when it developed The Lofts at Wolf Pen Creek in College Station, Texas. The project, which incorporates 253 stacked flats and 11 townhomes, also contains retail space and a clubhouse, making it mixed-use in nature.

“We have watched College Station and Texas A&M grow over the years and we wanted to do something different in the market,” says Barrett Kirk, senior vice president, acquisitions and development, of Houston-based Asset Plus. “We felt that the market was ready for something that has been done in other markets around the country, not necessarily on the student housing side, but on the multifamily side. The mixed-use concept has done very well in cities and attracts a younger crowd.”

Asset Plus is especially please with the location in the Wolf Pen Creek corridor, a special use district within the city of College Station. The district has certain architecture barriers and use restrictions. It also has benefits; it is located next to an amphitheatre and the Wolf Pen Creek trail system, both popular attractions. It is also within 1.5 miles of the Texas A&M campus. The site itself lingered for years while various development plans floated through city government. Asset Plus worked with the city to create an ideal plan, while maximizing the project’s density on the land.

“We let the site dictate what we could do with it,” says Kirk. “This corner was an amazing corner to have this mixed-use project.”

Asset Plus brought Houston-based Meeks + Partners to design The Lofts at Wolf Pen creek. “The location gave us a fantastic architectural opportunity, especially when you add the mixed-use elements,” says Keith Malone, associate partner with Meeks + Partners. “We can use the mixed-use element to connect the student community with the larger community of College Station.”

Meeks + Partners first began by locating the retail within the project, then locating the student amenities, then the tenant spaces. A 13,840-square-foot clubhouse – a very attractive amenity to tenants – was a must-have for Asset Plus. The clubhouse includes a two-story gym, tanning beds, a game room, a movie theatre, a sauna and a business center round out more amenities in the clubhouse. The project also is one of the few in the market that has secured, private parking. Security played a major role in the design of the project because of the sense of safety it gives residents and their parents.

“With students you want the wow factor,” says Kirk.”We believe that all these amenities give the wow factor on the leasing side, but also help renewals. We have two private student rooms in our business center. Every time I walk in, the place is packed.”

The lofts are also laden with attractive features. Each has 10-foot ceilings, exposed ductwork and hardwood floors. Six of the units are extra large, and as an additional amenity – and to create buzz around campus – they each come with a billiards table. All six units leased on the first day of availability.

“We try to take into account that a lot of these students are leaving home for the first time,” says Mark Lindley, senior vice president, construction division, of Asset Plus. “We want to invite them to stay with us, but feel comfortable in doing so. We want the parents to understand that too.”

Meeks + Partners placed as many loft units on the site that it could handle from a parking and living environment perspective. Asset Plus did not make the project as dense as possible, because it felt that it could compromised student life at the project.

“We kept in mind that we wanted to create some interior courtyards for private student amenity space,” says Malone. “The design itself is really an urban solution. It fit in perfectly with the city of College Station’s vision for this site.”

“We create a lot of pedestrian activity to this corner,” says Lindley. “We worked with a landscape architect to create a large plaza with fountains, outdoor tables and seating in front of the retail space. We also piped in music. This draws not only our residents, but the thousands of students that live within a half-mile radius of the project.”

Asset Plus manages three other projects in College Station, and has developed the Cambridge at College Station, a dormitory-style project, in the market.

“With student housing, you have to have a good location, the right product type and a good management company,” says Kirk. “Trying to find a good site in today’s world can be difficult. If you want to do a traditional garden style deal spread over 13 to 20 acres, you have to go further away from campus. Today’s market is doing just the opposite. You want to be as close to campus as possible.”

Source: January/February 2010 Student Housing Business

* Randall Shearin

Making sure beds remain occupied becomes increasingly hard when one looks at Texas’ student housing market. The past decade saw a drastic increase in new student housing projects, many of which were built 3 to 5 miles off campus, where developers could find enough land to build the larger communities they had planned. At the time, students flocked to the communities because they were new and they had amenities lacking in closer projects. That has changed today.

“What’s happened is that virtually every market is overbuilt,” says Jim Short, president and CEO of Campus Living Villages, a Houston-based student housing developer and owner. “There are more beds on and off campus than there are students. Guess who’s hurt? The ones that are 3 to 5 miles away and built 10 years ago, which had good amenities at the time, but have been far eclipsed by the latest and greatest.”

Short add that this has nothing to do with the recession, either. Too many people simply entered the market. Weakness is being seen in several markets such as College Station, and it stems mostly from the excess development.

“They talk about student housing being recession resistant. I think it’s just like any other section in the real estate market. If you overbuild it – if you put more beds or more units than what can be leased up in any given year – you’re going to have softness in the market,” says Barrett Kirk, senior vice president of acquisitions and development for Houston-based Asset Plus Corporation. Kirk mentions College Station, which added approximately 3,000 beds this year, as an example of this.

“Overnight, it went from being a great market to a weak market,” he adds.

Despite the soft market in College Station, Kirk and his company have seen measured success there with one of their new off-campus projects. The Lofts at Wolf Pen Creek. Situated just a few blocks from the campus of Texas A&M University and right across the street from Wolf Pen Creek Park and Amphitheater, The Lofts at Wolf Pen Creek blends off-campus living with New Urbanism.

The community features loft-style units that contain such luxury finishes as higher ceilings, hardwood-style floors, track lighting and hi-definition TVs in every unit. The ground floor of the four-story building contains 9,000 square feet of retail space, which is occupied entirely by restaurant tenants. Honeybaked Ham will be open by press time, with Tutti Pasta and Red Mango opening in February. The final tenant space is currently vacant. Asset Plus was selective in the tenants it allowed to lease the space, since the restaurants are expected to add to the overall experience of the community.

“The way we always thought of the retail component was as an amenity,” says Kirk. Retail space is not all The Lofts at Wolf Pen Creek has to offer. The community features two swimming pools, a 2,200-square-foot fitness center, a large clubhouse and other amenities that serve as what Kirk calls the “wow factor” when attempting to attract new residents. The amenities are also the reason many of those same people decide to renew their leases.

“When we go out and build a student housing project, the concept is that we are reaching out to kids who are leaving home for the first time. How do you make the kids comfortable, and feel safe and secure leaving mom and dad at the nest?” says Mark Lindley, senior vice president of Asset Plus’ construction division.

One change is that students today almost expect private bedrooms and bathrooms. “Putting them into a four-bedroom dormitory with cinder block walls and one bathroom at the end of the hallway is just not good enough for kids these days,” Lindley says. This has a lot to do with how many of these students grew up. The days of siblings sharing bedrooms and bathrooms are largely in the past for many families, and these children expect the same when they go off to college.

Another feature students expect today is a commitment to sustainability. The green movement is sweeping colleges nationwide, and students are expecting the same in their residences. Developers, in turn, are giving the market what it asks for. “You have the ability to design to what the market is expecting, and the market – particularly the younger crowd – are looking at it from a sustainability standpoint,” says Dave Wallace, CEO of Wallace Bajjali Development Partners. “They are wondering where out planet is going to be. Where is our environment going to be? Where is our oil production – our energy production – going to be 10 or 20 years from now? It’s the first generation that is really focused on those kinds of issues.”

This means more than that just making sure a project is LEED-certified. Students are interested in recycling programs, mass transit options near the community, activity programs to keep residents healthy and especially energy efficiency. For Wallace Bajjali’s most recent project, a community serving Baylor University known as Heritage Quarters, the design successfully merged students’ interest in efficiency with the developer’s goal of maximizing space. Wallace Bajjali only had a single city block in downtown Waco on which to construct the project. It responded to this challenge by utilizing a branded design from architectural firm Humphreys & Partners known as the e-Urban Student that answers the question of how to fit the most units possible on a small space. The four-story building contains 374 beds, which was done so by eliminating unnecessary and no revenue-producing spaces – a design idea that also saves an estimated 20 percent on utility bills for residents.

Sometimes, amenities are not necessary. Sometimes, the project itself is so different from everything else in the market that students are naturally drawn to it. This is the case with The Cottages at Lubbock, a 241-unit community serving the Texas Tech University community that opened this past semester. As opposed to the garden-style units many students are used to, The Cottages consists of 95 Craftsman-style houses each containing between two and five bedrooms. The community also features a plethora of amenities, most notable an 8.230-square-foot clubhouse with a screening room, a fitness center, a tanning salon, a business center, a billiards room, a computer lab, a swimming pool and a volleyball court.

“The Cottages of Lubbock offers students the best of both worlds; a neighborhood-style feel with resort amenities just minutes from the hustle and bustle of campus,” says Short, whose company recently acquired the community.

With off-campus student housing projects raising the bar to almost resort-level heights, schools are dealing with on-campus housing in a variety of ways. Universities still have the ultimate amenity – an on-campus location – and many see that as enough of an enticement to attract students. They also have the option to mandate students live on campus if occupancy starts to drop. Other schools, especially those trying to increase enrollment, are attempting to compete with off-campus housing.

“Universities that have the financial means to build new housing are doing so as a recruiting tool and are providing new developments with similar amenities – perhaps, not as grand – but the on-campus location can make up the differences.” Short says. Some schools simply choose not to try to complete with off-campus housing. Developers, for obvious reasons, believe this to be a good idea. They believe the private sector is better capable of building student housing cheaper, quicker and better than a school could.

“The universities should be focusing on investing their capital on things that generate credit hours, whether that is laboratories, classrooms or other things of that nature,” Wallace says. “A dormitory does not generate credit hours.”

Wallace see public/private partnerships as one way to please both sides when it comes to student housing. Typically, the developer will shoulder the cost of the project, while the university provides the students to fill it. If the agreement has a trigger in which the housing reverts back to the school’s control for a period of time, there is no downside for the school.

With the recession causing enrollment numbers at colleges and universities nationwide to increase, demand for student housing will see a similar job. Universities, which may be struggling due to depleted endowments, will be financially limited from spending money on new housing, setting up what Wallace sees as a perfect storm for these partnerships.

“You’re already seeing privatization of food and beverage operations [on campuses]…Student housing should be no different,” Wallace says.

While many developers are looking to the future for new designs and ways to do student housing, the traditional garden-style apartment complex has not been abandoned. There are situations in which the design fits, and many Texas schools, including growing UT campuses in Tyler, San Antonio, El Paso and Arlington, still have the available land to support these projects. For more established schools, the land has simply run out, and these projects are a way for student housing developers to get past the limited factor of available land.

“There are still a lot of people interested in doing garden-style communities, but there is not the land to do it,” Short says. “No one wants to go 3 miles from campus today to build anything, so you simply can’t pencil out a deal with enough beds per acre. You have to start doing something innovative.”

Source: Texas Real Estate Business – January 2010

Asset Plus Companies was honored with a Mayoral Proclamation from Houston's new mayor, Annise D. Parker, last week. The award was presented to recognize companies that play a vital role in the Houston area's economic development, provide jobs and shape the landscape of the Houston community.

The award was presented at the annual Construction Expo held at the Reliant Convention Center. Several companies were recognized along with Asset Plus for contributing to the area¹s growth and construction, covering many facets of the construction industry in the Houston region in 2009.

Senior Vice President of Construction, Mark Lindley and Assistant Vice President of Construction, Alan Hyland received the award on behalf of Asset Plus from Houston City Council member Anne Clutterbuck.