Market Profile: Athens, Ga.
Athens, Ga., is seeing new student housing being developed closer to campus. With an off-campus market that is aging, students are showing interest in new product.
Athens, Ga., is one of the perennial favorites of student housing owners. With the nation’s oldest chartered public university directly across Broad Street from its active downtown, Athens is the quintessential university town. Known for its arts and entertainment offerings as well as its university anchor, the town lives up to its name as a cultural mecca of the Southeast.
The University of Georgia had 34,536 students enrolled in fall 2013, most of whom reside off-campus. First year students are required to live on-campus, where the university has 22 residence halls in eight different communities. On-campus rates run from $2,238 to $3,399 per semester for various residence halls (2013-2014 rates). Off-campus options run the gamut from older homes and apartments to cottages and urban residential towers.
While enrollment at the university has been relatively flat for the last 10 years, housing stock has continued to grow as more students want to live closer to campus in projects with strong amenities. About 10 years ago, Athens-Clarke County enacted an ordinance that restricts the number of unrelated people who can reside in a single-family dwelling. Even in non-single-family zoned areas, no more than four unrelated people can live in a single dwelling unit (e.g., an apartment). While that ordinance, which was designed to protect single-family neighborhoods, hurt the off-campus housing market to a degree, it necessitated the need for more purpose-built student housing in the market.
The years since have seen a number of new projects open in the market. A number of cottage developments, most by locally-based national developer Landmark Properties, have been developed since 2004. Other large off-campus owners active in the market include American Campus Communities, EdR, Cardinal Group Management, Ambling Management and Asset Campus Housing. ACC controls about 1,717 beds in the market.
According to data compiled by real estate research firm Axiometrics, Athens is home to approximately 11,300 beds of off-campus, purpose-built beds. Average rent per bed ranges from $256 to $736, with an average at approximately $450 per bed.
“As of Axiometrics’ April survey, we showed the average occupancy for the market is 93.4 percent,” says Axiometrics National Account Manager Kelli Smith. “The average prelease is 66.4 percent, and both of those are ahead of last year’s trends. Rent growth overall is slightly down for the existing supply in the market, but occupancy and preleasing is up compared to last year. There are however several rent-growth success stories in this market, with a handful of properties achieving 4 percent to 7 percent rent growth.” Athens will see about 1,400 new beds coming to the market this August, and there were approximately 580 delivered in 2013. Many of those new beds will debut in Landmark’s The Standard at Athens, which is 100 percent preleased. “Students in Athens are willing to pay a premium to live closer to campus,” Smith says.
On the surface, says Wes Rogers, president of Landmark Properties, Athens looks like an OK market. Rents are not great and enrollment is static.
“The housing stock here tends to be older and far from campus,” he says. “New product that is close to campus does extremely well. As well, newer product, like our cottages, continue to perform well.”
Athens has continued to add more restrictions to zoning, and those will limit the supply of new purpose-built student housing that can be added in the future. For example, unless built downtown, the highest density allowed in a multifamily zoned district is 16 beds per acre of land (some areas allow 24 beds per acre); and no more than 25 percent of the units can have more than three bedrooms.
“That significantly reduces the number of four and five-bedroom units that can be built outside the downtown area,” says Rogers.
Landmark controls more than 1,600 beds in the market. For its newest project, The Standard at Athens, the company found a former warehouse site downtown and is building a mid-rise, 610-bed project with an infinity pool on the roof. The company realized that demand for the project would be strong, and adjusted rents well above market average. It achieved those rents for the project, which opens this fall.
Most of the product in the Athens market is two miles from campus, according to Dorothy Jackman, managing director of student housing for Colliers International. According to Colliers International’s student housing team, average market occupancy for Athens was 91.9 percent; market pre-lease for fall 2014 was 61.7 percent. The average price per bed for sales in the market has been approximately $45,000, according to Jackman. Buyers and sellers have spanned national, private and regional owners.
For fall 2014, there are two major projects being delivered off-campus. The first is Landmark Properties’ The Standard at Athens, located on North Thomas Street downtown. The second is Athens Ridge, a highly amenitized townhome project located a few miles from campus just over the Oconee County line. Rents at Athens Ridge were listed at $475 per bedroom per month, though the complex’s web site says it is fully leased for fall 2014.
The idea of living downtown and close to campus is so popular with UGA students that The Standard at Athens was 100 pre-leased for fall 2014 by the holidays. The community, which Landmark is co-developing with Harrison Street Real Estate Capital, will have a roof-top, infinity edge swimming pool as well as a 10,900 square foot clubhouse that will include dual fitness centers — strength training and cardio studio — gaming lounge with multiple flat screen televisions, sauna, study rooms with coffee bar, golf simulator, tanning beds, and courtyard. Each unit will feature a balcony. Residents will be able to park in the project’s own gated, covered deck centrally located in the community. Landmark marketed some of the corner units as premium, and will have additional amenities — like a pool table — in those units. The project also has 25,000 square feet of ground level retail; as of May, Landmark only had 2,000 square feet remaining.
EdR owns The Reserve at Athens, an off-campus project about 1 mile from campus, and is developing a second property with Chicago-based Schenk Realty called Georgia Heights, a 292-bed urban infill project directly across from the university that is downtown.
“The University of Georgia is a prototypical type market for us,” says Scott Barton, vice president of real estate acquisitions and development for Memphis, Tenn.-based EdR. “The opportunity for us to be adjacent to such a strong university was one that we couldn’t pass up.”
EdR is developing Georgia Heights on a site that formerly housed a bank at Lumpkin and Broad Streets. Of the 292 beds that EdR is building at Georgia Heights, 244 will be in one-bedroom units. The project broke ground in January 2014, and will deliver for fall 2015. The project will also have 43,284 square feet of retail space fronting Broad and Clayton Streets. Part of that will be leased to Sun Trust bank, who previously occupied the property. Georgia Heights has several communal courtyard and deck spaces with a swimming pool, large club room and outdoor grilling area.
“Because of the number of one bedroom projects, Georgia Heights will be positioned more for upperclassmen and graduate students,” says Barton. “There’s a lack of newer, high end product closer to campus.”
Smaller owners, like Atlanta-based Archer Properties, also enjoy a niche in the market. The company owns Archer on North, an older complex of one-bedroom units that the company revitalized [the project won SHB’s Innovator for best renovation in 2013]. Partner George Connell says that the company has been successful targeting graduate students for Archer on North.
“We were able to acquire that project, do a gut rehab and deliver it for less expense than a new one bedroom complex would have been to build,” says Connell. “The location close to downtown would have been difficult to duplicate. The opportunity we saw was the underserved graduate community who wanted one bedroom units.”
Graduate students at UGA — an estimated 8,000 of them enrolled in various disciplines like the university’s top law, business, forestry, journalism and agriculture schools — tend to approach their experience more as a job than undergraduates.
“Athens is a tier one market,” says Jackman. “It’s all about location in the Athens market. Right now, that could drive rates down in older properties, and that could put pressure on all the properties in the market. That remains to be seen. While we are seeing new deliveries, there’s always strong interest in Athens from buyers because it’s a tier one market.”
One recent sale in the market was local developer CollegeTown Properties’ Courtyard South project. The 56-bed infill project sold for $4.3 million to TWA Enterprises. The newly constructed project sits on 1.9 acres about 1.5 miles from the UGA campus.
On the development front, on tap for Fall 2016 is Landmark’s next project, an urban site that is just a few blocks from The Standard at East Broad and Oconee Streets. Landmark will develop the as-of-yet unnamed project — mixed-use with an estimated 800 beds of student housing and retail space — with Atlanta-based Selig Enterprises.
What to Eat, Athens (by SHB staff)
5 & 10
Located in Five Points, consistently ranked as one of Georgia’s top restaurants. 5 & 10 and sister restaurant The National, also downtown, are both steered by chef Hugh Acheson.
The Last Resort
One of Athens’ best operated, and consistently great, restaurants. Everything’s good.
Late night – get the curly fries with feta dressing with your burger.
Best bar in town. Grab a beverage and sit in the window to watch the town go by.
Ted’s Most Best
Good pizza and a great outdoor patio.
— Randall Shearin