Flicking the beam of his flashlight along ceilings and walls, Doug Painter pointed out fire safeguards student-housing complexes must include, ranging from the obvious – sprinkler heads – to the discreet – burn-resistant caulk.
Between show and tell, county building inspector Painter rattled off instruction to Dave Cioccolanti, worksite supervisor for Riverwalk Apartments, a 500-bed student housing project on Ledbetter Road. Using his flashlight as a pointer, he bounced the beam on a spot bare of insulation. “You need a strip there,” he told Cioccolanti. The fixes were few in number and small in scope. Painter deals with the occasional builder who skirts regulations; Cioccolanti isn’t one of them. Deadlines in the construction business are brutal, Painter said. Some people handle pressure better than others.
Cioccolanti’s daughter moved into rundown housing after going to college. No sprinklers, no burn-resistant caulk, no firewalls – no nothing in the way of safeguards and no way he’d sleep soundly at night. The builder promised his daughter he’d pay her rent if she would move into new off-campus housing. She did. He sleeps at night.
Modern safety features; extra beds Western Carolina University can’t afford; investor money flowing into the local economy – there’s a punch list of benefits from the student-housing boom that added half again as many beds in a three-year frenzy.
Some fear another real estate bubble, however, as developers – many new to the student-housing niche – make decisions that seem based on the amount of capital they can secure, not on market needs. The specter of urban blight in rural Jackson County grows as fields and forests give way to apartment complexes that look more like Charlotte than Cullowhee. “It is too much,” said Rick Bennett, a longtime Cullowhee real estate agent who rents to WCU students. “At some point, the law of supply and demand will weigh out. I don’t know when. But it will happen.”
Jackson County hasn’t acted on them yet, but a commissioners’-appointed Cullowhee group developed regulations that would, among other changes, prevent new student housing in some areas and limit the number of apartments in others. If adopted, the regulations might tap the brake. But it wouldn’t stop developers from continuing to build, not even if the market is saturated.
“You only have to look at what’s now Comfort Inn to see what it could mean,” county Manager Chuck Wooten said. The four-story building above N.C. 107 in Sylva stood half finished for five years after the original developer ran out of money. Another development group picked up the locally dubbed “ghostel” for $850,000 from a bank that paid $5.1 million for it during foreclosure.
The red-hot market has cooled some in the past couple of months. Developers call, county Planner Gerald Green said, but there’s less follow up. He believes they might be heeding flashing yellow lights. A speculator who’s not adverse to risk, however, might still see green, based on the black-and-white market numbers.
WCU projects its enrollment could grow in eight years from 8,000 on-campus students to roughly 10,750, said Vice Chancellor Sam Miller, who oversees student affairs. He holds a meeting for developers each semester and provides information and up-to-date data. There are 4,100 on-campus beds and 3,842 off-campus beds available or on their way; 500 of those are questionable because the co-owners of one of the companies, Monarch Ventures of Charlotte, are fighting each other in court. Without Monarch, about 3,300 beds are needed … maybe. “The forecast is based on history and assumptions that may not hold true,” Miller said. “The meetings aren’t always very interactive, but they do set the table for additional conversations all through the year.”
While Jackson County for now relies on developers to self regulate, other college towns warn blind faith can backfire. Tuscaloosa, Ala., finds itself with 3,000 more student beds than University of Alabama students. “Private investment groups came in and developed large projects. Then they would sell for quick returns,” city Planning Director John McConnell said. “We were left with the end results.”
A couple of years ago, business owners and civic leaders in Tuscaloosa grew alarmed. Even the most fervent free-market acolytes couldn’t ignore blight warning signs. Occupancy rates in the new Tuscaloosa mega-complexes were plunging. Some fell as low as 84 percent despite owners’ offers of lower rent and free iPads and TV. Finding another age group to supplement students as tenants wasn’t an option. Most working adults don’t want to live in student housing with 20-year-olds. And the apartments themselves are designed and furnished with young people in mind, McConnell said.
Last year, acting on a task force’s recommendations, city leaders banned apartment buildings from some Tuscaloosa neighborhoods. They limited shared living space in other areas to three unrelated people rather than four. And the council, by resolution, declared its lack of support for apartment complexes with more than 200 bedrooms anywhere in the city. “We hope we got a handle on the growth before the housing got too out of hand,” McConnell said.
Investors flock to student housing because it’s considered recession-resistant, perhaps even recession-proof. The “superb hedge,” one trade magazine burbles. A “safe haven” another says. Student housing is considered a sure bet because there are always students, and they must live somewhere. When the economy sours more people go to college. Students room with other students and can pay the going rate, allowing owners to maximize profit per square foot. And parents are available to co-sign rental agreements. Investors also see data showing record numbers of students in the United States; enrollment increases projected through 2020; university housing nearing capacity; and students staying in school longer.
“If WCU’s growth pans out, I can see a project or two going in every year or so,” said Tony Elders, Jackson County’s director of permitting and code enforcement. His office collected $219,000 in fees on large apartment complexes from late 2011 through 2014. “We’ve had the equivalent of one and a half to two inspectors busy with student-housing projects most every day for three years,” Elders said.
For WCU, private student housing helps more than it hurts. WCU wants to keep most underclassmen on campus. Studies show this boosts grades, school spirit and more. The university, however, encourages juniors and seniors to be more independent and live off campus, Miller said. The privately owned apartments help upperclassmen make this transition.
Off-campus construction also supports student growth at WCU without added housing costs. But there’s risk. “We must ensure our occupancy levels remain at a high enough rate that we can pay the bills,” Miller said. To navigate a balance, WCU last semester added an emergency brake. Each December, after reviewing dorm and residential hall vacancies, WCU informs sophomores whether they must join freshmen in living on campus. WCU told this year’s batch they could choose. About a quarter of the class moved into private housing. The university didn’t need them living in dorms and residence halls with a 97-percent occupancy rate.
Keeping students happy requires offering more than a bed, desk, communal bathroom and a dining hall down the street. Even yesterday’s one-port-per-pillow ratio for network connection is outdated. “Now kids connect four or five devices on the wireless network,” Miller said, “phone, tablet, gaming platform, streaming devices.”
On-campus rent ranges from $3,828 to $6,064 per student for the school year. Off campus, where 12-month and not nine-month leases are now the norm, students each pay $600 to $800 a month for some of the swankiest living this side of Cashiers. Perks include tanning beds, private bathrooms, fitness centers, plasma televisions, clubhouses, swimming pools and dog parks.
County officials speculate new apartments might mean vacancies for aged student housing. Research and anecdotal evidence doesn’t support those fears. Whether residents are still pocketing extra cash through backyard rental trailers and basement apartments isn’t known.
Properties built before 2012 had a higher average occupancy rate than those built between 2012-14, research group Axiometrics Inc. found in its four-state review that included North Carolina. Bennett doesn’t worry about filling his 19-year-old apartment building or four log cabins. He screens would-be renters carefully and spends “a lot of time” on day-to-day management. The real estate agent finds his rentals appeal to a segment of WCU students who aren’t drawn to the upscale living offered at new apartment complexes. “We’ve still got a lot of mountain kids who couldn’t care less about stuff like that,” he said.