Developers Move To Cash In On Trend Towards Cottage-Style Student Housing reports Bunk Bed Blitz

(EstateNewsWire.com, November 16, 2012 ) Matthews, NC -- The Wall Street Journal reports a new trend is gaining strength in college dormitory construction. Developers are meeting with increasing success (which include higher rents, lower vacancy rates, and reduced turnover) with off-campus student housing more closely resembling single-family homes than college dorms or traditional off-campus apartments.

The increasingly popular cottage-style dorms typically offer two to five single units. They pose a sharp contrast to high-density conventional dormitory towers with their crowded hallways, communal bathrooms and student bunk beds bolted onto cinder block walls. Cottage-style units usually have a separate bathroom for each living unit, plus a central clubhouse lounge and kitchen facilities.

Many offer such upscale amenities as hardwood flooring, nine-foot ceilings, stainless steel appliances, washer-dryer units and marble counter tops in bathrooms. Some developments provide extras like walk-in closets and lavish recreation facilities like exercise facilities, steam rooms, basketball courts, and golf simulation machines.

The managing partner of one real estate firm owning off-campus student housing describes cottage-style dorm units as offering “the best of both worlds, being in school but having the feeling of living on your own.”

At present, there are 35 cottage-style communities nationally with almost 19,000 beds, but another 18 developments with about 12,000 beds are being built or planned. The new-style dorms have won favor with real-estate operators because they can typically be rented for at least 10% more than ordinary off-campus student housing.

Landmark Properties, one large builder of cottage-style dorms – it owns about one-third of current cottage-style units -- this year had to create waiting lists for eight of its 16 cottage-style communities. The company also says its vacancy rates are about 3% lower for the cottage-style units. And unlike the typical 30% to 40% annual turnover rate for other off-campus housing, 50%- to-70% of tenants in cottage-style units return for a second year.

Landmark says it was prodded into its first cottage-style offering near the University of Georgia in 2004, following enactment of an Athens, Georgia ordinance limiting the number of people permitted in single-family homes.

Firms like American Campus Communities Inc. and Education Realty Trust Inc. previously concentrated on building upscale apartment buildings in college towns are now moving to get in on the cottage-style trend. American Campus, which has the largest number of student-housing beds, recently bought a 780-bed cottage-style Landmark development in San Marcos, Texas.

Because the low-rise, low-density developments resemble a neighborhood of single-family residences, they require substantial acreage, and so are prohibitively expensive in most urban areas. One developer puts cottage-style dorm construction costs as 10% to 30% above the cost to put up apartment-style off-campus housing off, but generally less costly than constructing a conventional high-rise campus dorm.

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