What housing bubble? As far as the city of Columbia is concerned, the building market for apartment complexes is no longer a sinking ship, and new student housing can take much of the credit for keeping the industry afloat.
According to City of Columbia Department of Public Works data, the number of building permits for “New Multi Family 5 or More Units” increased from two to 24.
Phillip Teeple, the Building Regulations Supervisor for Columbia’s Department of Community Development, attributes this increase to the influx of new student apartment complexes. He adds, though, that this number includes apartments that are not student housing, and even includes sororities and fraternities.
The Department of Public Works documents the valuation for these permits as increasing by $36.8 million from 2010 to 2011, while other years had an increased valuation of a couple million dollars at most, and even losses. Teeple says the city’s valuations for building permits are voluntary and are used for reporting purposes only.
“The city does not calculate permit fees based on the valuation, nor do we do any verification of the valuation,” Teeple said. He adds that companies mistakenly believe permit fees hinge on the valuation of the property, so many companies lower the valuation reported.
The valuation spike is enormous, and Columbia Mayor Bob McDavid attributes the increase to the type of student housing being built: luxury.
“I think what you’re seeing here is the large complexes coming in. These are not mom and pop duplex rentals that Columbia saw a generation ago,” McDavid said.
He says the building helps boost construction and recruitment for student enrollment at the University of Missouri, but says over-building is always a lingering possibility. McDavid says there are 3,000 bids “in the pipeline,” with a trend toward larger, national companies seeking space in the city.
Asset Campus Housing, Inc., is one such national company that is building a luxury student housing complex. Asset broke ground on The Domain this summer, which is expected to open in Fall of 2013. The site is located off Highway 63 and Stadium.
“In the past, there has been much less competition on the student housing side. It seems like anyone can do the multi-family development, but it really requires expertise on the student housing side,” Asset Senior Vice President of Development, Barret Kirk, said.
Kirk provides a list of amenities that rival or surpass Columbia’s leading apartments: granite countertops, faux hardwood floors, wifi and cable, a 1 bathroom-1 bedroom ratio, walk in closets, and a 10,000 square foot Clubhouse that holds a cyber café, theater, 24 hour gym, and tanning area.
Kirk would not reveal the cost of the project, but said it was a “huge development.”
And it seems students are willing to pay. MU junior David Adams pays $820 a month for his furnished bedroom at Brookside Downtown. Adams’ three roommates pay similar rates, which levels out to be $3,280 a month for a single apartment.
Larger apartment complexes have started charging per bedroom rather than per unit. The cost initially seems lower (and may be for the individual), but the apartments’ reap nearly double the profits.
Adams says his rent may be a “little steep,” but he is willing to fork over the cash for its prime location in Downtown Columbia.
“Crafstmanship is a little shoddy. When I moved in, some of the cabinets had a big dent or chunk taken out of them, and they [Brookside] won’t replace it,” Adams said. “But I’m not complaining.”
Adams says he is also willing to pay a little extra in rent each month in order to avoid paying separate bills for utilities and cable, another potential source of profit for student housing companies.
McDavid knows companies will continue their bid to build in a thriving college town, but he’s not thrilled to see large companies build on the periphery of town.
“Are we creating a commuter campus? Who is responsible for getting these students to campus? It has fallen on the city to keep up with that,” McDavid said. “Some owners are putting apartments in the triangle between the University of Missouri campus, Stephens College campus, and Columbia College campus. I personally like that trend because it puts the students in a place where there is already infrastructure.”
Downtown is becoming prime real estate, but with limited building capacity, the competition will be concentrated.