UNR area housing tight
Keller Realty sales manager David Larson knew there was healthy demand for off-campus student housing near University of Nevada, Reno.
Still, he was taken back by the response when he opened up sales for individual units in a new student condominium project late last year.
All 67 units in the University Housing Group’s The Edge sold out in three days, mostly through word of mouth.
“That’s more than fast,” Larson says.
Crews hadn’t even broken ground yet on The Edge, which is scheduled to open in the fall on the southwest corner of North Virginia Street and Tallus Way.
Larson says the company’s goal was for the project to sell out in 18 months.
Investors should take notice, says real estate investment expert Floyd Rowley, a member of Colliers International’s Multi-Family Advisory Group.
Given the university’s rising enrollment, Rowley projects strong demand for moderate-income apartments and condominiums north of Interstate 80 within three miles of the campus.
The number of undergraduate UNR students grew by about 3,000 from the 1999-2000 school year to the fall of 2003, and university officials project another 23 percent increase – roughly 4,000 students – in undergraduate enrollment by the 2008-2009 school year.
The enrollment jump is due to the university’s overall growth as well as the state’s Millenium Scholarship program.
But Larson says UNR’s need for more beds isn’t the only thing heating up the market.
The continued migration of Californians, rich with Bay Area equity, to northern Nevada, is playing a role, as well a considerable number of buyers who took their money out of the stock market to invest in real estate.
More off-campus housing projects are planned.
Larson says The Edge developer has chosen an undisclosed site for another 70-unit student condominium project in Reno.
In addition, a Houston, Texas-based company called Sterling University Housing is building a 219-unit apartment complex for students northeast of the university on Enterprise Road.
The company has broken ground and plans for a fall opening.
Seeing a need for new, high-quality student housing, the Dinerstein Companies, a national developer of apartments, created Sterling University Housing in 1997.
Noting that the housing supply at most major colleges and universities was often dated and inadequate, the company began an aggressive program to build and renovate college student housing across the country, now managing 32 communities in 23 states.
UNR’s booming enrollment, as well as the lack of new student housing here attracted the firm to Reno, says broker Ron Peden of Peden Properties in Wichita, Kan., who represented the developer in the land acquisition.
The new apartment complex will include two-bedroom, three-bedroom and four-bedroom apartments and will lease the units by the bedroom, Peden says.
Many new student apartment projects now lease by the bed instead of by the apartment, so students don’t have to worry about whether their roommates will cough up their shares of the rent.
Although demand is high, developing more supply could be challenging because not much land is available.
“Sites are hard to find,” Rowley says.
“But increasing demand is likely to make a few available.”
Meanwhile, some buyers are seeing opportunity in single-family homes that can be converted to apartments.
Bernard Sabels got in the student housing market 10 years ago and has seen home values triple.
He rents 20 units near the university.
A lack of supply could push students to live farther away from the campus.
Susan Palmer, residential property supervisor for Premier Properties, says about 20 percent of the students who rent apartments from her company live outside the campus area.
“They live in areas from Spanish Springs to southwest Reno and don’t mind the commute.”
Overall in the Truckee Meadows last year, low mortgage interest rates as well as the continued migration of Californians to Nevada fueled a booming single-family housing market.
That kept pressure on the apartment market, Rowley says.
But even so, overall rents rose 3.4 percent over 2002, compared to a 1 percent to 2 percent decline nationally.
Rowley projects that off-campus student housing rent will rise over the next several years if supply doesn’t keep up with demand.
Palmer says rents for housing around UNR increased slightly in the last two years, but she doesn’t project additional increases in the very near future.
Sabels, whose memories of struggling financially through school are still fresh, says he doesn’t want to increase rent.
“I could go up,” he says.
“But I like to keep it reasonable.”
Heather Ashbridge, who started with Nevada State Development Corporation in 2008, previously served in several roles with the organization, including assistant vice president and loan officer. She is based in NSDC’s Reno office.