Temple's wave of student housing starts could be cooling off as the market saturates.
Two large off-campus housing facilities near Temple University are reportedly facing problems with vacancy, possibly heralding an end to the surge in the construction of student residences around the institution.
The Edge, a massive 800-unit apartment complex constructed by real estate tycoon Bart Blatstein in late 2006, had a longstanding lease with Temple's Department of Student Housing for 750 units. However, with the recent completion of Morgan Hall, a new 1,275-student dorm across the street from The Edge, that lease has apparently been severed.
The Edge, which is now managed by the international Campus Living Villages Corporation, no longer appears on the Office's online list of official residence halls. An employee at The Edge's leasing office acknowledged that the complex was no longer officially affiliated with Temple's student housing department.
Additionally, Diamond Green, a brand new 92-unit private apartment complex that was constructed last summer for $20 million, was recently put on the market for $32 million. Recently, speculation has emerged that the complex is in dire straits, due to high vacancy.
"I heard it was 50 percent [occupied], but I'm not sure," says Michael Petri, head of Blackstone Development, which has constructed student housing around the university for the last seven years. A source with knowledge of the development disputed that number, which was also circulated online, saying the occupancy rate was closer to 80 percent.
"We still think there is a high demand for student rentals," says Corey Lonberger at Rittenhouse Realty Advisors, the listing agent for Diamond Green.
A decade ago, a shortage of dormitory space and a profusion of vacant land around the university led to an explosion in privately constructed student rentals. The rapid pace of the development was not without pain, drawing headlines as some neighbors complained about illegal dumping of construction materials and student partying, as well as an increase in crimes involving student victims just off-campus.
Temple now estimates that half of the 12,000 student residents in the area live in private, off-campus housing units. The high-density Morgan Hall was specifically built to rein in that growth.
"We built Morgan Hall for two reasons," said Temple spokesperson Ray Betzner: "First, because our students asked for more on-campus housing, and the second was because the neighbors around Temple told us they wanted more students living on campus."
So is the spike in new housing reaching a saturation point? Developers, like Petri, say the vacancies at The Edge and Diamond Green are simply reflections of the inferior units they offered.
"The Edge has pretty small rooms and Diamond Green is edge of the campus area, at Diamond and 10th. Everybody else that I talk to is pretty much full. ... It all depends on the size and location of the units," said Petri.
However, he later added that he had a few buildings on the east side of Broad Street that were only 60 percent to 70 percent full. While Petri alluded to a large new development he had planned for the area, he mentioned that part of his optimism for the neighborhood stemmed from the fact that he had seen non-student tenants buffeting the existing housing market.
Statistics can at least confirm that developers are still confident. New construction permits are still at all time high: 92 new construction permits have already been pulled around Temple this year, compared to 64 for all of 2012, according to L&I records.
It's possible that Temple's 25,000 non-resident students could continue to fuel the real estate market around the university for years to come, buoyed by actual homeowners from the growing neighborhoods around Center City. But if students are already balking at living in tiny, expensive apartments at centrally located complexes (a "large" studio measures 268 square feet and costs $999 per month at The Edge, a significantly higher per-square-foot cost than many Center City offerings) or "remote" dwellings at 10th and Diamond, it seems unlikely that many non-students would be lining up take their place. Temple's strategy of listening to its neighbors may be having its intended consequence.
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