Can MSU's off-campus student housing boom keep booming?

The annual off-campus student housing boom near Missouri State University has a little more ooomph this year.

Since the recession, new private development around campus has had an almost singular focus: amenity-rich apartment complexes, marketed to college students. Starting with the opening of Walnut Quads in 2010, multiple "by-the-bed" complexes have opened each summer, significantly altering the look of the area in a matter of years.

This month saw the largest increase in beds yet, thanks largely to the opening last weekend of Aspen Springfield — a development along St. Louis Street designed to house more than 550 college students.

"Aspen is a game changer to the supply in the market," said Win Stewart, a partner with rival Beacon Student Housing.

With the addition of so many new apartments to the area, it's a natural time to assess to assess the state of the market. Asked about the sector's future — and whether the public should expect new construction to continue — Stewart and other active developers responded with outlooks that ranged from optimism to a wait-and-see approach.

Additional large developments, all said, are unlikely. Future construction is constrained by the fact that location is key, and only so many locations are suitable.

There's also a risk that supply will exceed demand. In Columbia, even more explosive off-campus housing growth near the University of Missouri in Columbia recently has hit a few snags. But Springfield, the developers said, appears less likely to suffer that fate.

Big developments boost capacity

Located a block south of Hammons Field, Aspen Springfield's quartet of five-story residential buildings added 166 units — a total of 564 beds — to the local market.

The complex recently posted on Twitter that it only has "a few spots left" — but there's one sign that demand may have been, at least initially, lower than Texas-based developer Aspen Heights expected.

In October, an Aspen executive told the News-Leader that two-bedroom units would start at $694 per bed per month, with three-bedroom units starting at $664. As of this month, however, advertised prices were $599 for a spot in a two bedroom, and $589 for a three bedroom — a drop of 14 and 11 percent, respectively.

Aspen Heights, which has built similar complexes near college campuses around the country, declined to specify what percentage of the development was leased. The company said pricing "is always dynamic" and that it makes "changes in every market due to a number of factors."

"There have been no developments to date in Springfield by institutional quality, national operators," Vice President of Development Ryan Fetgatter said in an email. "Having a national operating platform to leverage and pull resources from will help us operate Aspen Springfield on an entirely new level for the market."

Aspen Springfield is the largest single off-campus housing complex near Missouri State — but it will only hold that title for about a year. A mile away on Kimbrough Avenue, developer Bryan Magers is preparing for a one-year construction push within his Bear Village development.

Since 2012, Magers — owner of Bryan Properties —  has essentially been building an Aspen-style development in stages. The complex's fourth building opens this month, boosting capacity to 375. Four more buildings are slated to go up in the next year, doubling the number of spots.

Every spring, Magers told the News-Leader, he finds himself wondering if this is the year that the area around Missouri State will be overbuilt — when there won't be demand to match supply. So far the answer has always been no — but Magers knows he'll be asking the question again next year.

"We are going to finish Bear Village, and we are hoping there are 375 more students that will be able to fill it," Magers said.

The newest building is fully leased, Magers said. In recent years, he's been keeping rents steady, as more competitors come on line.

"I don't know what the future has in mind, but we'll definitely look at it after we open up the remainder of Bear Village," he said.

Enrollment trends important

To find a market that is overbuilt, local developers said, look just three hours north, to Columbia.

"They've got kind of a perfect storm there (in Columbia) from a housing perspective, meaning a glut of housing to me," said Matt Miller, owner of Springfield-based Miller Commerce.

In May, the home of the University of Missouri enacted a six-month moratorium on processing permits related to new multifamily housing developments in and near downtown. City leaders said they wanted to study infrastructure needs, protect historic properties and examine the overall student housing market before allowing more construction.

Beacon Student Housing's Stewart said Columbia has seen more than 10 developments about the size of Aspen Springfield added within the past decade. Springfield has grown at a more measured pace.

"Relative to Springfield, Columbia has had an astronomical addition in supply," Stewart said.

Additionally, in the wake of high-profile incidents on campus in the fall, the University of Missouri expects an enrollment decline of about 7 percent this academic year. In May, the Columbia Daily Tribune reported the university had produced an advertisement to lure students back to residence halls from private developments.

At Missouri State, officials are expecting record enrollment this fall, and the university is considering whether to build another residence hall.  For three years in a row, existing dorms have opened in "overflow" status — meaning demand for beds well exceeds the supply.

For developers, that growth in enrollment is key, Stewart said — and the main reason you don't see a similar building boom around Drury University, where enrollment figures have been ticking down.

"Banks and lenders, they pay attention to that when they loan the project," he said.

What's next?

Beacon Student Housing opened three developments between 2012 and 2014. Before Aspen Heights purchased its space on St. Louis Street, Beacon had the site under contract, Stewart said. But the company ultimately deciding not to take on such a large project.

In general, Stewart said, the student housing market across the country is starting to get saturated, and construction costs have gone up.

"I think there's definitely a slower lease-up for the overall market," he said, referring to the length of time it takes for units to be rented.

Stewart said he doesn't expect to see another project of the same magnitude as Aspen Springfield in the foreseeable future.

"I don't think you'll see another 500-bedder, or 600-bedder," he said.

Miller agrees. Since bringing by-the-bed leasing to Springfield with Walnut Quads in 2010, he's played a role in developing Deep Elm, The Jefferson, The Q'ube, Pad Madison and The Monroe, which was later bought by MSU for use as a residence hall. He expects to see more growth — but not all at once.

"I would predict that we see a steady volume of these smaller projects," Miller said.

Growth is constrained by location — the closer to campus the better. Developers such as the Vecino Group have bucked that trend somewhat, finding success by converting the former Woodruff building and others downtown into housing marketed to students. But most want a spot within a few minutes walk from classrooms, said Miller, who considers Aspen Springfield to be arguably too far.

"The locations are very difficult to find," he said.

Miller estimated that 2,000 students now live in by-the-bed developments, accounting for less than 10 percent of MSU's enrollment, another 20 percent living on campus. That still leaves plenty of people, he said, to fill new communities.

"As a developer, I like those odds. I think there's a big pool still to capture," Miller said.

A by-the-bed primer

By-the-bed developments became popular near other college campuses before migrating to Springfield in 2010. They account for nearly all the residential growth around Missouri State since then.

The "by-the-bed" modifier refers to the leasing style. With a traditional apartment, roommates typically sign the same lease — meaning one tenant can be responsible for the entire rent if the others leave. At by-the-bed developments, tenants sign a lease for their bedroom only; they can typically apply to be housed with specific individuals, or let property managers place random roommates in the.rest of the apartment.

Tenants face less risk of unexpected charges. Developers, in turn, typically charge more than if they were renting out the apartment as a whole.

The newer developments also tend to be furnished, and rents typically include utilities and related charges. Some complexes, additionally, tout significant amenities as well. Aspen Springfield has a pool and volleyball court; Bear Village's expansion plans include a pickleball court.