Posted 8/27/2012 12:00 am
Updated 2 years ago
The Grove, a 632-bed property developed by Campus Crest Communities Inc. of Charlotte, N.C., opened for business this summer. Three other projects are under construction that could bring another 1,983 beds on line for the 2013-14 school year if ambitious schedules don't overreach.
"It's substantial, and there are more coming," said Ramsay Ball, commercial real estate broker with the Bentonville office of Colliers International. (Click here for a list of projects.)
Another trio of projects valued at a combined $120 million-plus has received zoning approval and could produce a crop of more than 1,500 beds for the 2014-15 school year.
These niche multifamily projects are part of a mosaic of upward trending economic development activity in Fayetteville.
Sales tax collections have increased 5.5 percent to more than $16.6 million, and unemployment is down to 5.5 percent through June.
New commercial construction permits so far in 2012 total 730,000 SF, more than double the 330,000 SF a year ago. The city has issued 235 single-family construction permits compared with 155 for the same period 12 months ago.
"Things have definitely picked up, with activity scattered all over town," said Jeremy Pate, Fayetteville's development services director. "This is one of the first years that rental-occupied homes surpassed our owner-occupied homes."
Driving that is student-related housing, and the demand isn't slacking.
UA Chancellor David Gearhart's pronouncement that he wants enrollment to eventually reach 28,000 reaffirmed the direction of the market. An estimated 24,700 students are enrolled this fall at the flagship of the University of Arkansas System.
The Fayetteville campus already is a hodgepodge of construction sites of new, expanded and renovated facilities to accommodate the burgeoning undergraduate population.
In addition to classroom space, the university is in the process of adding 630 beds with two on-campus projects set to open next school year.
Nine-story Hotz Hall is undergoing renovation back to dorm space for 416 students, a $17.2 million endeavor. Housing for 214 students is a big part of the $26.5 million new Founders Hall that will include dining and retail space.
UA-controlled housing can handle about 5,300 students, and conventional apartments and rent houses have historically filled the gap.
The mounting number of shiny new off-campus student housing projects, tripped out with the latest amenities and trendy furnishings, presents a new phenomenon in the market.
"It's kind of impressive what's going on," said Brian Donahue, senior associate at the Tulsa office of the commercial real estate services giant, CBRE Group Inc. "What gets built will be absorbed. It's just a matter of how long."
Apartment occupancy in the Fayetteville market stood at about 94.9 percent as of June, according to data compiled by CBRE.
Donahue is unaware of any sizable traditional market-rate apartment projects in the works for Fayetteville. He said conventional apartment players are sitting on the sidelines watching and waiting to see what effect the new models targeting students will have on the traditional multifamily market.
The projects are positioned to offer a hybrid apartment-dorm experience, featuring a best of both worlds pitch.
Apartment-style swimming pools, clubhouses and full kitchens are combined with private bathrooms and an upscale dorm layout with utilities and high-speed Wi-Fi included.
In addition, individual residents are only responsible for their own monthly rent, so no more deadbeat roommate worries. Rates at The Grove appear comparable to on-campus options.
The monthly rent for a share of a three-bedroom/three-bathroom 1,200-SF floor plan is $585 and $615 for a share of a 1,000-SF two-bedroom/two-bathroom model.
The rates are higher than conventional apartments. Monthly rent for a two-bedroom/two-bathroom layout averages $652 in Fayetteville.
The opening of The Grove on the southern edge of campus provided an alternative home for 120 Kappa Kappa Gamma members while their on-campus sorority house undergoes a $7 million renovation and expansion during the 2012-13 school year.
"Even their house mother is here," said Liz Forsbach, sales manager at The Grove in Fayetteville.
One of the three private off-campus student housing projects that hasn't started construction but is scheduled to open in 2014 is battling through opposition.
Residents of the University Heights neighborhood have taken the city to court regarding its rezoning approval for Project Cleveland on the northern edge of campus.
The proposed development would replace the 60-unit Sunshine Place Apartments and several adjoining rental houses with a 122-unit LEED-certified project.
Specialized Real Estate Group of Springdale downsized its plans from five stories to two stories and downscaled twice from its original 222 units in unsuccessful efforts to defuse neighborhood opposition.
Specialized Real Estate is working with the Sterling University Housing arm of the Dinerstein Cos. of Houston on a two-phase project near the eastern edge of campus.
Construction of the 673-bed first phase, known as Sterling Frisco, is under way near the Frisco Railroad tracks. A 559-bed second phase is planned to follow.
Three would-be student housing projects linked with sites west of Interstate 540 are in limbo, including a 600-bed proposal by the Capstone Cos. of Birmingham, Ala.
"Right now, we're effectively on hold," said Rob Howland, executive vice president of Capstone. "We have not applied for any type of site plan approval. I can't give you a timetable on when we might start that back up.
"The land is no longer under contract, but it remains a potential long-term possibility."
The future of the other two drawing-board deals by 908 Development Group of Tampa, Fla., and Landmark Properties of Athens, Ga., appears to be as uncertain.
Representatives from the two firms couldn't be reached for comment.