Charlotte, N.C. — Flagship state university markets aren’t growing as quickly, CCG says.
Charlotte, N.C. — Campus Crest Communities’ (NYSE:CCG) third quarter total revenues were up from $20.4 million to $34.5 million, and the company says it plans to keep growing by building more student housing near state universities with affordable tuition. That path has led the REIT to the growing category of second-tier universities.
Moscow, Idaho, Flagstaff, Ariz., or Wilmington, N.C., may not sound like hotbeds for commercial real estate development, but universities in cities such as these create the most significant demand in student housing, and the company says it plans to continue down this path for the foreseeable future.
CCG focuses on serving a larger demographic in an area that hosts a state school, but not the flagship state university. The ideal is to tap the upper end of a mid-market, exemplified by schools such as the University of Central Washington or San Angelo State in Texas. The six properties that CCG currently has under development for the 2013-2014 academic year will deliver 3,564 beds at universities in Fort Collins, Colo., Muncie, Ind., Pullman, Wash., Indiana, Pa., Norman, Okla., and State College, Pa.
“This strategy works,” says Ted Rollins, CEO and co-chairman of CCG. “We believe there are 250 of these markets in the United States. Our whole focus is making sure we’re there to fill the void.”
Rollins says mid-market universities have a higher growth rate than a state’s flagship universities.
“If you look at the trailing four years, [second tier universities] have grown 12 percent versus the larger flagship, which has grown approximately 9 percent. Tuition is affordable, costing about 16 percent less than the flagship school. What we’ve also found is that these schools draw a good quality of student. They generally come from a lot of the same metro areas where the flagship schools are drawing. We tend to underwrite the upper end of the mid market.”
The company focuses on universities with a variety of degree programs and a high number of tenured professors.
“When we look at the demographics of student housing and the places most of the students are, it’s at these mid-market schools. It’s why our tagline is ‘Where America Goes to College.'”