Developers see sparsely populated student accommodation as an opportunity to create high-end apartments for professionals.
According to Moody’s, 30 percent of the country’s public and private universities have a deficit, the New York Times reported. And because there are fewer students on campus as a result of the pandemic, some are trying to bridge the financial gap by working with private developers to turn the dormitories into apartments.
Pebb Capital, in partnership with Coastal Ridge Real Estate, bought a rent-by-the-bedroom building called Cadence near the University of Arizona in Tucson for $ 33 million. The companies are planning a $ 12 million renovation to make the property a combination of studios and one- and two-bedroom apartments.
In Austin, the Rastegar Property Company recently acquired and refurbished more than a dozen multi-family properties, of which approximately 50 percent were students. One of the buildings, Plaza 38 near the University of Texas, Austin, was transformed with new equipment and is now called Hyde Park Square. However, with the reconstruction comes an allusion to prices: the rent for the updated building is 25 percent higher, according to the Times.
Pebb Capital uses this business model before the pandemic. In 2016, the company bought Alabama, a student apartment building in Greenwich Village owned by Yeshiva University, for $ 58 million, in partnership with TriArch Real Estate Group. The developer transformed the dated dormitory into elegant apartments for graduate students and young professionals, and sold the building to a Simons Foundation affiliate in February for $ 104 million.
Pebb Capital and TriArch have also jointly developed a student housing project called Monarch Heights for Columbia University. However, due to the pandemic, the partnership moved the property to serve both students and regular tenants.
[NYT] – Akiko Matsuda