February 11, 2008
Co-ed community | From Portland to Orono, developers push amenities to tempt students into off-campus housing
By Sara Donnelly
Developer Joe Cloutier is mindful of the seasons. It's a bitterly cold afternoon in the dead of winter and Cloutier, president of Realty Resources in Rockland, stands at the edge of what will be the driveway of Portland's first privately owned student housing complex. The sky today is clear, and Cloutier points out that some of the dorm's top floor units have a fantastic view of Back Cove.
For now, though, those views are obstructed by enormous plastic sheets rustling three floors above Cloutier from a building that is little more than a concrete and wood shell. He's taking a look at the building's progress with project engineer Erica Martin, of Pizzagalli Construction Co., and two members of his staff. While his staff shivers and hunches their shoulders close to wind-reddened faces, Cloutier stands hatless, gloveless, as relaxed as an afternoon golfer. And it's no wonder, because Cloutier is thinking summer.
Martin is talking about how the private dorm should be complete by the beginning of August.
"No, it will be done by then," corrects Cloutier.
The conversation acquires a tinge of tension.
"Yes, it will be done," she says.
"Has to be," Cloutier says.
Cloutier knows that if the Bayside Village Student Apartment Community isn't done by August, his $22 million gamble could remain for months after as empty as it is this winter day. That's just one of the challenges inherent in the emerging niche market of privately owned and operated student dormitories. Private student housing is a market some say is ripe for expansion, especially in urban areas like Portland where the number of undergraduate and graduate students keeps rising but universities' on-campus housing budgets haven't.
At Bayside Village, Cloutier's first private dorm, he plans to charge each student tenant $725 a month for a 12-month lease to live in one of the 100 four-bedroom apartments in the building, though as this issue went to press he was running a special rate of about $100 less to entice those critical first tenants. The rent includes amenities typical of private student dorms, like on-site laundry, wireless Internet, free cable TV, a lounge. The rent is so steep and the accommodations so nice, in a debate over whether to grant Cloutier a 10-year, $1.2 million tax increment financing package for Bayside Village, one Portland city councilor referred to the project as "high-end housing," according to the Portland Press Herald. The city eventually gave Cloutier the TIF.
If Cloutier can fill his 400 beds with some of the 15,000 students he estimates go to college in Greater Portland, he stands to pull in almost $3.5 million in his first year alone. But if he can't get those leases signed in August before the fall semester, his second chance won't roll around until the few weeks between the fall and spring semesters. If he fails, students will settle elsewhere, his beds will remain empty, and he'll have to consider converting Bayside Village to multifamily apartments and forfeiting his TIF.
Cloutier doesn't expect that will happen, though. "I've been interested in student housing for a long time," he says. "I think it's a good business and I think there's a need here."
Cloutier joins developers around the country who are lately looking at private student housing as the next great niche. At a time when real estate is on the ropes, targeting students who are often still relying on mom and dad's checkbook can be a reliable way to diversify a development portfolio. But catering to the college crowd comes with its drawbacks ˆ besides the split-second lease signing and turnover window every year, experienced private student housing developers warn that 18- to 21-year-olds require significantly more management than do tenants of a typical multifamily apartment building. The partying, hormonal drama and newfound freedom freak-outs can literally be tough on a building ˆ Capt. Josh Ewing of the Orono Police Department says his force responded to calls from Orchard Trails, the state's only operating private dorm, 176 times during its first semester, often for noise and drunken vandalism.
But if a developer can get a feel for the unique challenges inherent in private housing, there are millions to be made.
The lure of tanning beds
Enrollment has been steady at the seven universities in the University of Maine System and has skyrocketed at the state's community colleges. Since 2002, when the Maine's technical colleges became community colleges, enrollment has increased 55%, according to Karen Hamilton, publications and marketing coordinator at the Maine Community College System. Last fall, 11,682 students were enrolled at community colleges in Maine. Three dorms were built this year alone to accommodate housing needs on campus ˆ Hamilton says all of the 1,000 beds available to students in the system are occupied.
In the UMaine System, 92% of the 7,433 on-campus beds available are occupied, according to John Diamond, UMS executive director of external affairs. That leaves some 38,000 students each year who don't want or can't get on-campus housing at the state's universities.
The University of Maine in Orono, the state's largest university, enrolled 11,912 students this fall. It only has enough beds for 3,841 of them, meaning, in private student housing developer lingo, its bed-to-student ratio is 32%. The lower the ratio, the more kids who need beds and the better the market for a private student dorm.
College Park Communities, a student housing company in Pennsylvania, liked UMaine's ratio. In Fall 2006, the company opened Orchard Trails, a 52-acre apartment complex with 12 buildings and 144 four-bedroom apartments. The theme at Orchard Trails is "Where nature meets luxury" and Kathy Grim, spokesperson for College Park Communities, says the complex's landscaped campus with hiking trails, rolling lawns and lots of trees was designed to cater to the Maine student, as all of College Park's 95 properties are tailored to the local population.
Orchard Trails is hard to beat for location and amenities. It's located on Empire Drive across the street from campus, and included in rent is use of a fitness center, a DVD theater, a computer lab and a tanning booth. According to the Orchard Trails' website, the fully furnished apartments currently rent for $475 a month per tenant. As is typical in private dorms, each individual in an apartment has his or her own lease, so if someone bails and decides to spend the semester trekking in Nepal, College Park Communities reserves the right to replace the lost roommate with a stranger.
But despite the perks, Orchard Trails' success thus far has been mixed. This year, UMaine students say managers kept dropping Orchard Trails' rent to try to fill its beds. According to Grim, the occupancy rate at the complex is now in the "high 80s, low 90s," but students and Orono police Capt. Ewing say one or two buildings are currently empty.
Eryk Salvaggio, editor of UMaine's Maine Campus newspaper, looked into Orchard Trails but as a 27-year old junior decided he'd rather move into a regular Orono apartment to get away from "the loudness and the vandalism" that can come with dorm living, public or private.
But the paper's sports editor, 20-year old junior Nick McCrea, has lived at Orchard Trails since September and plans to renew his lease next year. "Let me put it this way: In Orchard Trails, one bedroom is about the same size as an average two-person dorm room," says McCrea.
McCrea pays $465 a month for his Orchard Trails apartment. At an annual cost of $5,580, McCrea's rent is about $1,500 more than a comparable suite on campus that includes a meal plan. But assuming he can sublet his apartment this summer, McCrea figures his cost will drop to about equal to the Orono dorms. And money aside, Orchard Trails is good living as far as McCrea is concerned. He's close to campus and has a taste of independent living, but doesn't have to deal with aging facilities.
"Dorms are cramped, crowded and smell bad," McCrea says. "But Orchard Trails, you can tell, is a lot more open."
When Orchard Trails first welcomed tenants, it was perhaps too open. Orono police received so many noise complaints and party-related calls during the dorm's first semester in 2006 the department assigned officers to patrol the halls every Thursday, Friday and Saturday night. McCrea's paper, the Maine Campus, last year mentioned the dorm so frequently in its police blotter it once distinguished an unrelated call by titling it "Noise Complaint that Didn't Take Place at Orchard Trails."
(Marlene Sahms, director of marketing at College Park Communities, says Orchard Trails employs a three-strike policy to maintain order, though she says the company has yet to evict a tenant.)
Market attraction
Back in Portland, Joe Cloutier is hoping for a captive, and civil, audience. The University of Southern Maine's Portland campus is barely a five minute walk from Bayside Village's location on Marginal Way, and USM is putting the school's only dorm, Portland Hall, up for sale any day now. If Portland Hall's future buyer doesn't want college kids, that means about 300 students from USM and Southern Maine Community College in South Portland will be denied the character-building that comes from good old dormitory living.
Cloutier is hoping graduate students and even faculty members from USM, Southern Maine Community College, the University of New England, Maine College of Art, St. Joseph's College and Andover College will be willing to live at Bayside Village. Typically, students who can't find housing on campus spill into the Portland housing market, renting apartments with friends and sharing buildings with people of all ages. But Cloutier thinks students will pay extra for that dorm experience. They want the laundry in house, the close proximity to the 8 a.m. lecture class, the pizza parties coordinated by on-site residential staff. Bayside gives them all that, he says.
As for the challenge of recruiting the students in time, Cloutier hired a leasing director, Lori Mattson, who recently joined general manager Scott Ranger at a recruiting table at the USM campus and has already signed up two students. At the end of the day, Cloutier just hopes this property will be a successful new addition to his portfolio of condominiums and multi-family apartment buildings.
"I'm hoping to make a profit," he says, walking down a muddy trail into the 90-space parking garage under Bayside Village. "There's nothing like this downtown and the kids don't want to be in Gorham. I knew Portland Hall is closing, made sense to do it. The jury's still out."
For now, though, those views are obstructed by enormous plastic sheets rustling three floors above Cloutier from a building that is little more than a concrete and wood shell. He's taking a look at the building's progress with project engineer Erica Martin, of Pizzagalli Construction Co., and two members of his staff. While his staff shivers and hunches their shoulders close to wind-reddened faces, Cloutier stands hatless, gloveless, as relaxed as an afternoon golfer. And it's no wonder, because Cloutier is thinking summer.
Martin is talking about how the private dorm should be complete by the beginning of August.
"No, it will be done by then," corrects Cloutier.
The conversation acquires a tinge of tension.
"Yes, it will be done," she says.
"Has to be," Cloutier says.
Cloutier knows that if the Bayside Village Student Apartment Community isn't done by August, his $22 million gamble could remain for months after as empty as it is this winter day. That's just one of the challenges inherent in the emerging niche market of privately owned and operated student dormitories. Private student housing is a market some say is ripe for expansion, especially in urban areas like Portland where the number of undergraduate and graduate students keeps rising but universities' on-campus housing budgets haven't.
At Bayside Village, Cloutier's first private dorm, he plans to charge each student tenant $725 a month for a 12-month lease to live in one of the 100 four-bedroom apartments in the building, though as this issue went to press he was running a special rate of about $100 less to entice those critical first tenants. The rent includes amenities typical of private student dorms, like on-site laundry, wireless Internet, free cable TV, a lounge. The rent is so steep and the accommodations so nice, in a debate over whether to grant Cloutier a 10-year, $1.2 million tax increment financing package for Bayside Village, one Portland city councilor referred to the project as "high-end housing," according to the Portland Press Herald. The city eventually gave Cloutier the TIF.
If Cloutier can fill his 400 beds with some of the 15,000 students he estimates go to college in Greater Portland, he stands to pull in almost $3.5 million in his first year alone. But if he can't get those leases signed in August before the fall semester, his second chance won't roll around until the few weeks between the fall and spring semesters. If he fails, students will settle elsewhere, his beds will remain empty, and he'll have to consider converting Bayside Village to multifamily apartments and forfeiting his TIF.
Cloutier doesn't expect that will happen, though. "I've been interested in student housing for a long time," he says. "I think it's a good business and I think there's a need here."
Cloutier joins developers around the country who are lately looking at private student housing as the next great niche. At a time when real estate is on the ropes, targeting students who are often still relying on mom and dad's checkbook can be a reliable way to diversify a development portfolio. But catering to the college crowd comes with its drawbacks ˆ besides the split-second lease signing and turnover window every year, experienced private student housing developers warn that 18- to 21-year-olds require significantly more management than do tenants of a typical multifamily apartment building. The partying, hormonal drama and newfound freedom freak-outs can literally be tough on a building ˆ Capt. Josh Ewing of the Orono Police Department says his force responded to calls from Orchard Trails, the state's only operating private dorm, 176 times during its first semester, often for noise and drunken vandalism.
But if a developer can get a feel for the unique challenges inherent in private housing, there are millions to be made.
The lure of tanning beds
Enrollment has been steady at the seven universities in the University of Maine System and has skyrocketed at the state's community colleges. Since 2002, when the Maine's technical colleges became community colleges, enrollment has increased 55%, according to Karen Hamilton, publications and marketing coordinator at the Maine Community College System. Last fall, 11,682 students were enrolled at community colleges in Maine. Three dorms were built this year alone to accommodate housing needs on campus ˆ Hamilton says all of the 1,000 beds available to students in the system are occupied.
In the UMaine System, 92% of the 7,433 on-campus beds available are occupied, according to John Diamond, UMS executive director of external affairs. That leaves some 38,000 students each year who don't want or can't get on-campus housing at the state's universities.
The University of Maine in Orono, the state's largest university, enrolled 11,912 students this fall. It only has enough beds for 3,841 of them, meaning, in private student housing developer lingo, its bed-to-student ratio is 32%. The lower the ratio, the more kids who need beds and the better the market for a private student dorm.
College Park Communities, a student housing company in Pennsylvania, liked UMaine's ratio. In Fall 2006, the company opened Orchard Trails, a 52-acre apartment complex with 12 buildings and 144 four-bedroom apartments. The theme at Orchard Trails is "Where nature meets luxury" and Kathy Grim, spokesperson for College Park Communities, says the complex's landscaped campus with hiking trails, rolling lawns and lots of trees was designed to cater to the Maine student, as all of College Park's 95 properties are tailored to the local population.
Orchard Trails is hard to beat for location and amenities. It's located on Empire Drive across the street from campus, and included in rent is use of a fitness center, a DVD theater, a computer lab and a tanning booth. According to the Orchard Trails' website, the fully furnished apartments currently rent for $475 a month per tenant. As is typical in private dorms, each individual in an apartment has his or her own lease, so if someone bails and decides to spend the semester trekking in Nepal, College Park Communities reserves the right to replace the lost roommate with a stranger.
But despite the perks, Orchard Trails' success thus far has been mixed. This year, UMaine students say managers kept dropping Orchard Trails' rent to try to fill its beds. According to Grim, the occupancy rate at the complex is now in the "high 80s, low 90s," but students and Orono police Capt. Ewing say one or two buildings are currently empty.
Eryk Salvaggio, editor of UMaine's Maine Campus newspaper, looked into Orchard Trails but as a 27-year old junior decided he'd rather move into a regular Orono apartment to get away from "the loudness and the vandalism" that can come with dorm living, public or private.
But the paper's sports editor, 20-year old junior Nick McCrea, has lived at Orchard Trails since September and plans to renew his lease next year. "Let me put it this way: In Orchard Trails, one bedroom is about the same size as an average two-person dorm room," says McCrea.
McCrea pays $465 a month for his Orchard Trails apartment. At an annual cost of $5,580, McCrea's rent is about $1,500 more than a comparable suite on campus that includes a meal plan. But assuming he can sublet his apartment this summer, McCrea figures his cost will drop to about equal to the Orono dorms. And money aside, Orchard Trails is good living as far as McCrea is concerned. He's close to campus and has a taste of independent living, but doesn't have to deal with aging facilities.
"Dorms are cramped, crowded and smell bad," McCrea says. "But Orchard Trails, you can tell, is a lot more open."
When Orchard Trails first welcomed tenants, it was perhaps too open. Orono police received so many noise complaints and party-related calls during the dorm's first semester in 2006 the department assigned officers to patrol the halls every Thursday, Friday and Saturday night. McCrea's paper, the Maine Campus, last year mentioned the dorm so frequently in its police blotter it once distinguished an unrelated call by titling it "Noise Complaint that Didn't Take Place at Orchard Trails."
(Marlene Sahms, director of marketing at College Park Communities, says Orchard Trails employs a three-strike policy to maintain order, though she says the company has yet to evict a tenant.)
Market attraction
Back in Portland, Joe Cloutier is hoping for a captive, and civil, audience. The University of Southern Maine's Portland campus is barely a five minute walk from Bayside Village's location on Marginal Way, and USM is putting the school's only dorm, Portland Hall, up for sale any day now. If Portland Hall's future buyer doesn't want college kids, that means about 300 students from USM and Southern Maine Community College in South Portland will be denied the character-building that comes from good old dormitory living.
Cloutier is hoping graduate students and even faculty members from USM, Southern Maine Community College, the University of New England, Maine College of Art, St. Joseph's College and Andover College will be willing to live at Bayside Village. Typically, students who can't find housing on campus spill into the Portland housing market, renting apartments with friends and sharing buildings with people of all ages. But Cloutier thinks students will pay extra for that dorm experience. They want the laundry in house, the close proximity to the 8 a.m. lecture class, the pizza parties coordinated by on-site residential staff. Bayside gives them all that, he says.
As for the challenge of recruiting the students in time, Cloutier hired a leasing director, Lori Mattson, who recently joined general manager Scott Ranger at a recruiting table at the USM campus and has already signed up two students. At the end of the day, Cloutier just hopes this property will be a successful new addition to his portfolio of condominiums and multi-family apartment buildings.
"I'm hoping to make a profit," he says, walking down a muddy trail into the 90-space parking garage under Bayside Village. "There's nothing like this downtown and the kids don't want to be in Gorham. I knew Portland Hall is closing, made sense to do it. The jury's still out."
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