February 25, 2007

Cockroaches and Two A.M. Shenanigans: The Niche Market of College Student Housing

Around many college campuses new apartment complexes are springing up like weeds. What a great real estate investment; landlords are able to charge higher rates with less up-keep, at least for the moment. Though current landlords and development companies may be capable of charging more while providing less, this will be a short lived concept. Student housing it has become synonymous with high rent and poor living conditions. Beginning with dorm living until the transition to off-campus apartments, it is impossible to know what the student will be stuck with; cockroaches, rats, maybe just vandalism, or pranks. Students are beginning to educate themselves regarding apartment living and are becoming much more selective. Around the University of Southern California there is already a higher demand for safe and luxurious living options of which Conquest Housing has acquired a relative monopoly creating quite an uproar. I have commented on two blogs regarding these issues: Tom of The Real Estate Bloggers brought up information regarding the investment opportunity in student housing, while Joanna Lin of the Daily Trojan took a more personal approach relaying her own stories of student housing issues with Conquest.

You make many valid points. Conquest is taking over and with little concern for the little landlord. However, it is important to consider that Conquest is not a typical landlord; they own several buildings at the University of Southern California as well as UC Santa Barbara. While I agree with you that because of this and their monopoly of the market around USC and that Conquest has become an expensive option, there are many other important things to consider. Certain aspects of the college experience come without price tags. There is not a value that can be placed on a great life experience. Last year I was an ‘expectant Tuscany resident,’ and I have chosen to return. For the last two years I had many different and equally horrible living situations. Freshman year USC placed me in Cardinal Gardens Apartments where my roommate and I lived with cockroaches for the first time as well as rats and without a working heater. The next year was not any better. The area surrounding USC is dirty, dangerous, and to many, completely foreign. Conquest, though they have had many issues, have created a reliable and safe housing option for students. They offer much more sanitary options with higher security than university housing could possibly offer. As a private landlord they provide extra services like gyms, personal trainers, car detailing, massage therapists, twenty-four hour security guards and cameras, as well as constant cleaning of the premises for messy college students. For parents as well as students they have created a convenient option for sophomores, juniors, and seniors who no longer want to be on campus, but do not want to constantly worry about their security. Can one really put a price on a student’s safety, his/her overall wellbeing? Is it not feasible that these independent landlords struggled “to remain financially viable” not because of Conquest, but because they were undercharging their tenants?

As a college student and someone interested in real estate this article brings about some contradicting ideas for me. "Quality of the housing does not have to be the best to get rents that are above average", but is it not true that with the increasing demand and hence supply of off-campus student housing there will need to be either an increase in the quality, a decrease in the price, or both? The article states that "children of the baby boom generation are taking longer than their predecessors to graduate, so they need housing for a longer stretch," it seems it would be beneficial to create housing that attracts a more mature audience. This could mean more expensive housing, but with higher quality options. What about catering to the customer in order to run a successful business? I argue that though it may seem like quality is of little importance to college students, times are beginning to change. Expect that the current expense of getting into the niche market will only increase as the average college student becomes more real estate savvy.


JFL said...

Thanks for the blog! I didn't know you lived at Tuscuny. I just recently moved out of there, but i now live in anouther conquest building. I guess I don't really have a problem with conquest, but it took them so long to get all of the amenities actually working! Now Tuscuny is great though (right when I move!), especially with Chipotle almost done!! See you wednesday!

Tom said...

Thanks for the link and great start to your site!