New Growth at Ole Miss
NCAA Division I athletics and a storied Southern environment at a state-funded university draws quite a crowd, for a school that's off the beaten track. (Keep reading for some tips on dining out in Oxford.)
With its ties to Southern literature and a tailgating tradition consistently ranked one of the best game-day experiences in the country, the University of Mississippi in Oxford has an allure that students and even student housing developers, owners and managers find hard to resist.
"I have traveled from coast to coast and visited hundreds of markets, and Oxford always stood out," says Roger Phillips, CEO of Texla Housing Partners, a manager and co-owner of University Trails, which was acquired in 2010.
"The city had always been on my Top-5 list of markets I'd like to be in."
Many who operate in Oxford talk about the uniqueness of the area as one of the reasons they were interested in building, owning or managing there.
"We liked that the Oxford area and Ole Miss have a wealth of tradition, history and a sense of community," says Core Campus COO Benjamin Modleski. "We knew Oxford was going to be a wonderful place to go."
The area's appeal is also important to operating a student housing property.
"Oxford is a true college town with a small-town atmosphere and charm," says Cassie Carter, corporate marketing director, Innovative Student Housing. Innovative bought Taylor Bend, a 288-bed project, in December. "To operate in this market, you must be in tune with what's going on locally and become involved in the traditions to stay relevant. For example, students read the paper, The Daily Mississippian, so print advertising is not a no-no in this market."
Developers and investors also like Oxford's supply and demand metrics and rising enrollment at the University of Mississippi, which has been growing since the mid-1990s.
"A large percentage of Ole Miss students come from out of state, approximately 20 percent," Carter says. "Which indicates a high demand for student housing on and off campus."
Juxtapose the university's growth with something of a void in the off-campus student apartment selection, which, for the most part, has not included samples of the industry's blossoming definition of Class A or core developments, and you have a market that is on the cusp of change.
Modleski and Core Campus are part of a new wave of developers who are debuting brand-new, top-shelf student living to the area for the first time in the past three to four years. Core Campus' The Hub at Oxford; Carter and co-developer Chance Partners' Highland Square; and The Retreat at Oxford, a joint venture between Landmark Properties and EdR, will add just less than 2,000 beds to the market when those three communities open in fall 2013.
Chris Epp, co-director of ARA's National Student Housing Group, says there is a large amount of "student housing by default"in Oxford, which is older conventional apartments in neighborhoods around the university. But the new properties that are being constructed north of Hwy. 6 are getting a lion's share of the attention among students who are accustomed to, and can pay for, this type of living.
Enrollment at Ole Miss grows by approximately 4.4 percent every year. The university has a live-on-campus requirement for its freshmen. According to Lionel Maten, director of student housing at the University of Mississippi, the on-campus capacity is 5,267 beds.
"In the fall, we are at full capacity," he says. "We tend to be at about 90 to 94 percent in the spring."
Epp says the market is not yet over-supplied but it could slip into that realm should changes occur in the Ole Miss housing plans.
"If the school makes plans to add a major addition of dorms and requires any more than the freshman class to live on campus, then that becomes a concern," he says. "But right now, it's a big, state-supported school that's growing on a nominal basis, year over year."
The university has built two residential colleges in recent years and opened an 862-bed residence hall in August 2012. After the first-year requirement is filled, most students who aren't living in fraternity and sorority houses depart in search of off-campus living.
"We provide a database on our website that's managed through a third-party vendor," Maten says. "There is a cost associated with it, but companies can list their properties there. Whenever students inquire about off-campus housing, that's where we send them."
A large, eye-catching photo of one of Landmark Properties' colorful rows of upscale cottages greets students who visit this website.
The Retreat at Oxford is a $37.6 million development that will introduce 668 beds in different models and floor plans of cottages to the market. EdR will manage and Landmark will construct and develop the community. The two companies will jointly own the Retreat at Oxford, with EdR assuming a 70 percent majority ownership.
"A lot of these new deals that are under construction are incredibly luxurious, but they're construction sites right now," Epp says. "They've been able to get preleased out of a construction trailer or a little retail front with nothing more than a mock-up of the model unit and some renderings."
Such is the case with The Retreat. "There is a decent amount of supply under construction," says Wes Rogers, CEO of Landmark Properties. "But that said, as of this week, the project is 73 percent applied for and on pace to fill at pro forma rates. We are pre-leasing at our projected velocity and without concessions."
Just down the street, Core Campus is bringing its branded community, The Hub, to Oxford. The three-story walkup apartment with 582 beds and a separate amenity building is offering a sleek option to student renters with an amenity-rich property built around a pool, fire pits, basketball courts and refined extras in each units that demonstrate how new student housing construction is taking its cues more from hotels than from apartments, like an under-counter fridge in a mini-bar area.
Carter and Chance Partner's Highland Square community is taking its cues from the city of Oxford itself. It is a large $39 million mixed-use concept being developed on 60 acres. The size of this parcel enabled the developers to go in a bit of a different direction in anticipation of the city and university's cultural zeitgeist and desire for something higher-end, while also divergent from other new construction.
"If you dig a little deeper into this market, you'll find that a lot of the out-of-state students are coming from more urban areas, such as Memphis and Atlanta," says Kyle Brock, senior vice president of development for Carter. "They're more accustomed to urban environments. This was a very large site, and that presented us with the opportunity to build something different than what's currently in Oxford. We started building cottages, but we also wanted to give our project more of an urban feel. We think one of the best amenities in Oxford is the town square itself."
Carter recreated a version of the city's historic downtown square, packed with popular shops and restaurants, in its student housing development that could allow space for coffee shops, a library or a business center. The community amenities are laid out in the same design as if they were purely restaurant and retail.
"It provides an aesthetic link to the city," Brock says. Highland Square is 70 percent leased for the 2013 school year. Its variety of flats, cottages and townhomes has been a major draw among those who seek denser environments of apartments. The community is also being selectively marketed to groups such as fraternities and sororities that want to live off campus, have privacy, but still maintain their community. According to Maten, 34 percent of the student body at Ole Miss is in a Greek organization.
Many of the newer developments are pricing rents competitively to fuel occupancy and plan to slowly raise rents over time.
"The challenge of building new product is you don't really have a way to comp your rents because no one's currently paying what we're going to ask," Brock says. "So we're going in knowing that our community, the Retreat and The Hub are going to set a new mark in rents. It's more art than science when you go into a lease up. Once we achieve some momentum, we raise rents slightly. That's our strategy. Not everyone has that strategy. Some people go in and set rents and stick with them. We feel that the second time around when you're doing renewals, you have a better idea of how the market's going to react to your pricing. We take our cues from the market and create equilibrium."
Rents at Highland Square are approximately between $550 to $620 per bed, per month.
The new communities may be receiving a lot of attention, but the market boasts other properties with competitive features that are hard to match. Innovative Student Housing and The Carlyle Group purchased Taylor Bend in December after having managed the property, which was built by a local developer, since August. The pace in Oxford trends more toward development over acquisition and disposition these days. Taylor Bend was the second acquisition for Innovative Student Housing, and the firm plans to add more beds in the future. The property is also unusual because it is one of the few walk-to-class communities in the market. It is one mile from the university and is within walking distance to The Grove, the game-day gathering area in the middle of campus. University Trails and Campus Creek, which is owed and managed by EdR, is also close to campus.
In 2010, when Texla Housing Partners acquired the 492-bed University Trails, which was built in 2001, there were a few smaller projects erected and some larger ones between 2006 and 2008, but nothing on the scale of the 2013 deliveries.
"We have spent a fair bit of money since we took over on furniture and interiors," Texla's Phillips says. "We don't have the latest lazy rivers and bells and whistles that some of the new projects have, but we also don't have the price point that goes along with that. We keep a good spread between ourselves and the new construction. We feel that's a safer place for us to be."
As in many markets, student housing as it's known today wasn't common before 2000. Some examples of the purpose built footprint include The Connection at Oxford, with 816 beds, which was built in 2008; Lafayette Place with 366 beds was built in 2010; Campus Creek with 636 beds was built in 2004.
Older student housing properties face a choice when presented with up-market competition, Epp says. They can either continue to be value players or can begin capital improvement plans to upgrade units and outdoor amenities in an attempt to resemble higher-rent counterparts.
Beds at the newer properties go for up to $600 per month, but average closer to the low $400s at University Trails. Epp says that ultimately the most important factors in student housing are bed-bath parity and proximity to campus. While few students attending Ole Miss walk from their off-campus apartments to class, the bus system, Oxford University Transit, is a popular way for students to get around. University Trails is seven-tenths of a mile from campus and the first stop on the route.
Phillips says he's curious to see how the new communities will affect Oxford's unique market.
"It's a small town. In terms of turn, there are limited resources, and that does make for a challenge relative to other bigger markets with deeper benches of the trades you need to get through those times, and it can take some creative measures to get crews of painters and cleaners to do what you need in the time frame in which you need it," he says. "I think it will be interesting to see these new properties come on and see how that will change things. There hasn't been a meaningful number of beds added to the off-campus market like this in several years."
— Lynn Peisner
When in Oxford...
Brokers, developers, owners and managers active in the Ole Miss market share their favorite spots to eat and hang out while visiting Oxford.
Wes Rogers, CEO Landmark Properties
Ajax Diner in Oxford serves some of the best soul food I've ever had.
Chris Richards, senior vice president and chief operating officer, EdR
Ajax Diner has the best chicken and dumplings I've ever eaten. Taylor Grocery & Restaurant for catfish and sides worth the short drive to the outskirts of Oxford. On the weekends, you'll get an extra treat of some of the best live music anywhere.
Randy Churchey, president and chief executive officer, EdR
City Grocery. It's hard for me to pick between the fried chicken or the brisket and biscuits – you win either way!
Tom Trubiana executive vice president and chief investment officer, EdR
You can't go wrong with at any of the restaurants in Oxford, in fact, it's hard to pick just one on a visit there. But whatever you do, don't miss Square Books. A stroll around the square isn't complete without a visit to this bookstore that's steeped in Southern literature.
Roger Phillips, CEO of Texla Housing Partners
Breakfast: Big Bad Breakfast. Lunch: Ajax is a must. For dinner, we like Old Venice Pizza in the Square.
Kyle Brock, senior vice president of development for Carter
Boure. Great food, great atmosphere, great location.
Benjamin Modleski, COO of Core Campus
The house-cured Tabasco/brown sugar bacon at Big Bad Breakfast is absolutely amazing.
Doug Sherman, CEO Innovative Student Housing
Bottle Tree Bakery. Humble Pie is a must-have. Visit Rowan Oak, William Faulkner's former Oxford home. Shop the Square; Square Books, Neilson's Department Store. Go to a show at The Lyric.
Chris Epp, co-director of ARA's National Student Housing Group
If staying in Oxford, a night in The Square is a must. Boure is a great spot. I was there in February. A young couple got engaged at the table next to mine. If you're caught in Memphis on the way out, go to Restaurant Iris. Truly one of the best meals I've ever had anywhere.