SOUTH BEND — Take a drive through the neighborhoods around the University of Notre Dame campus and you can see a potential problem on the horizon.

Hundreds of new apartment units — in the form of large complexes and town homes — have come on line over the past decade as local and outside investors have sought to capture a piece of the student-housing market.

“Many of them were built with the anticipation of leasing to undergraduate students,” said Bryan Bennett, manager for Kramer Properties, which owns about 20 properties around campus. “They were built with the types of features students like.”

But two years ago, Notre Dame announced changes to its residential policy, requiring incoming freshmen beginning with the class of 2018 to live on campus for six semesters, the same rule that Saint Mary’s College instituted several years ago.

In addition, the university instituted a variety of incentives and disincentives to keep upperclassmen on campus, believing the Notre Dame community was essentially being eroded by the loss of leadership from upperclassmen — some of whom have protested the loss of freedom and the higher costs of living on campus.

The policy change already is causing ripples in the market, as “now leasing” signs are evident around campus with only about a week to go before the semester gets underway.

“We’re all competing for the same dollars,” Bennett said. “And the number has gone down.”

Of Notre Dame’s undergraduate student body of roughly 8,500 students, about 63 percent of seniors and 15 percent of juniors currently live off campus, according to the university.

Because this year’s sophomore class already is prohibited from living off campus, there already are likely more than 50 fewer student renters this year, and next year the number could balloon to well over 300 when the junior class is included.

And that doesn’t factor in the upperclassmen, who already are being courted by the university to remain on campus, where a new men’s residence hall is being added this year and a women’s hall next year.

The effort to keep more undergraduates on campus has landlords watchful, if not anxious. Most didn’t want to talk on the record, but they admitted there was concern about the loss of undergraduate student tenants moving forward.

Though Notre Dame’s graduate school population of about 3,990 has grown by about 550 over the past 10 years, graduate students generally prefer different types of accommodations — quieter and more privacy — than undergraduates.

Some of the larger complexes were built with undergraduates in mind, featuring three- and four-bedroom units and amenities such as swimming pools, exercise rooms and large common areas.

At Campus View and Campus Court apartments — a somewhat older complex on the east side of campus — leases are already off by about 20 percent, said the leasing agent, who didn’t want to provide her name. Those two complexes alone contain about 500 bedrooms.

“I came from a place that didn’t require living on campus, so this is all new to me,” she said, referring to her time managing student apartments at Western Michigan University in Kalamazoo.

To combat the competition for a smaller number of students, the complex will market its proximity to campus, price-friendly rent, ample parking and free utilities with the exception of electricity, she said.

With vacancies already prevalent, landlords are a bit on edge.

“We are constantly reviewing the market and the market conditions and seeing what’s going on in terms of supply and demand,” said Mark Neal, chief operating officer of the Bradley Co., which manages the 100-unit Stadium Club Apartments on the north side of campus.

“There’s been a big boost in supply in recent years,” said Neal, adding that Stadium Club is in good shape for this year though it, too, focuses on undergraduate students.

But with the hundreds of additional units that have been added in recent years and the change in Notre Dame’s housing policy, there will be competitive pressure on complexes — especially those serving the undergraduate population, Neal said.

It’s like the hotel situation in the South Bend-Mishawaka market, he said. When a new hotel is built in a fairly saturated market, there is pressure on older properties to “refresh, refurbish or knock it down.”

Bennett, from Kramer Properties, agreed that the shift is going to cause pressure, especially among the larger complexes competing for undergraduates. And he believes the loss of potential undergraduate renters could be far greater than the estimates.

Over the past decade or so, Kramer sold its large apartment buildings and now focuses on about 20 single-family homes, some of which have been broken up into apartment units.

“We predominantly rent to seniors and graduate students, so I don’t think we’ll be affected,” Bennett said. “The larger complexes that were built with undergraduates in mind have a lot less flexibility.”

But if there are problems in the future, the business could expand its market for renters, convert some properties back to single-family rentals or consider other options, Bennett said.

Steve Cooreman, president of Irish Realty and Irish Custom Homes, suggested that some of the properties could be redeveloped into other uses if the market thins out dramatically.

Cooreman is putting a considerable amount of his focus on building custom homes and town homes in the area immediately south of campus. That area is in especially high demand as the gap continues to shrink between Notre Dame and downtown South Bend.

“There’s a lot to do in both locations,” he said. “People like the idea of being able to walk or bike to those locations.”

(Excerpt) Read more Here | 2019-08-18 11:00:00
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