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Interesting article about Park West mega dorm.

redd38
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https://www.bloomberg.com/news/articles/2018-06-07/texas-a-m-and-oklahoma-luxury-dorms-stumble-amid-sticker-shock
AggieBarstool
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And people still deny we have a housing glut in BCS.
Captn_Ag05
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Sharp will expand TAMU to 80,000 and get 15,000 to RELLIS to fill the beds.
CS78
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AggieBarstool said:

And people still deny we have a housing glut in BCS.


There's a student apartment glut but still a large shortage in starter/ low end houses. How it all shakes out, we'll have to wait and see. I expect an increase in empty rent houses will increase the supply of starter homes but the market will be able to absorb it. As for the apartments, woo-hoo, more low income housing and crime injected into the older areas.
techno-ag
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They just opened a few months ago. Rent was too high with the high rises in Northgate competing with them. Their vacancy has been around 50%. So they adjusted and have pre-leased up to 90% for the fall. It's business and they're adjusting. No big deal.
halibut sinclair
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AGnCS
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Picadillo
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The report says they did not consider the availability of new housing supply coming on line in the area. Result - downgrade the bonds 8 levels. Gives muni-bonds a bad name and screws rental property owners who have taken risks and worked hard. Hmmm
Oogway
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If you are a pretty hands-on responsive landlord, then you will probably (hopefully?) be able to weather the market. About a year or so ago, when we were all discussing some of the apartments on line and in the works, and I remember describing some young families I knew who were looking to buy but didn't mind an older home with a little wear and tear from being a former rental. At least one of those families found a home in south CS probably by someone who decided to liquidate some of their rentals. (I don't know the exact story because they switched jobs so haven't seen them for awhile). I imagine some landlords will lower their rents or sell or try and lease it out on weekends but that gets pretty competitive too. There are more townhome projects being built this summer, and look for more out toward the HSC too so I have been steering students I know (that are good tenants) to landlords that are also good so they can work with each other on leases that are mutually beneficial.
threecatcorner
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I don't get how the group behind Park West qualifies as either tax-exempt or "non-profit".
lost my dog
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threecatcorner said:

I don't get how the group behind Park West qualifies as either tax-exempt or "non-profit".
It's a public-private partnership. The buildings are built on A&M land, and A&M gets a stream of income from them as land rent. Given this situation, they become eligible for funding via tax-exempt bonds, in the same manner as any governmental institution. The bonds are tax-exempt for the holders. The property is exempt from city real estate taxes because it's A&M land. But the developer is not non-profit.

The problem is that right now rent revenue minus costs isn't enough to pay the bondholders.If this happens for too long, the developer will lose the property. And A&M will have to start paying lawyers to maintain its interests.
Rapier108
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CS78 said:

AggieBarstool said:

And people still deny we have a housing glut in BCS.

There's a student apartment glut but still a large shortage in starter/ low end houses. How it all shakes out, we'll have to wait and see. I expect an increase in empty rent houses will increase the supply of starter homes but the market will be able to absorb it. As for the apartments, woo-hoo, more low income housing and crime injected into the older areas.
Heck, there is a shortage for apartments for non-students and families.

Coworker was looking for one and the cheapest he could find was around $850 a month unless he wanted to live in a crappy area, which he and his wife do not. For a two bedroom, it was over $1000.

But the construction of Ag shacks continues unabated.
redd38
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$1000 for 2-bedroom non-student housing in a nice area doesn't sound too bad.
Cyp0111
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Techno,

They cut rent to a level that doesn't cover operating expenses and now they're pulling reserves. Banking on the ability to increase rent y-o-y. The bonds were downgrade 8
Levels...
Oogway
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It may depend upon the situation though. The increase in rent-by-the-room style apartments may work for students and connected young locals who have graduated but have friends here. They split the cost of a higher rent and management/owner can charge a little more $$. For a single parent/divorced parent/low income family/etc it is more difficult I expect because the rent isn't necessarily split, and it may be harder to find apartments that are set up for them (w/o the individual bathrooms and so on). A young couple that wants to save for a house might go into a townhome, but in order to get out of the student areas the portion of income going toward rent is higher. Many of us had to make sacrifices and choices when we were younger, so that is nothing new, but it would be great if some of the rental homes get converted back to owner occupied (if sold) as that has a lot of benefits for the community as a whole.
techno-ag
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Cyp0111 said:

Techno,

They cut rent to a level that doesn't cover operating expenses and now they're pulling reserves. Banking on the ability to increase rent y-o-y. The bonds were downgrade 8
Levels...
Yup. According to the article the plan is to get them occupied then start increasing the rent. Sound plan, IMO.

There's risk in everything. Plan A did not work out with the unexpected luxury high rise competition forcing down rents. So they are adjusting and going to Plan B. It's far too early to label this a failure, y'all. Let's wait a few years and see how it shakes out.
rcannaday
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Just think of all the high rises on the other side that are going up... I wonder what their bonds are doing? Or the additional new condos and apartments that have gone up as well... You are only considering one property, but that property also absorbed a bunch of rentee's from other apartment/condo's ...
Cyp0111
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That theory usually works when renting to older students or areas where you have year round rentals... not college. They messed up the math...bad
lost my dog
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techno-ag said:

Cyp0111 said:

Techno,

They cut rent to a level that doesn't cover operating expenses and now they're pulling reserves. Banking on the ability to increase rent y-o-y. The bonds were downgrade 8
Levels...
Yup. According to the article the plan is to get them occupied then start increasing the rent. Sound plan, IMO.
Except students can always go rent elsewhere if Park West's raises the rent to an uncompetitive level.

1.618
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Park West has a ton of amenities to maintain and it's hard to spread those costs across 50% occupancy. Also, they furnished 100% of the rooms even though they only had 50% occupancy. They get to spread those furnishing costs out using a depreciation schedule but in real money, those costs all hit at once. There is enough free surface parking that they don't sell out the reserved garage spots so that source of cash flow is a bust until surface parking becomes more scare. They are in a tough spot, for sure. I hope that they can make things balance out until RELLIS is up to capacity because that would be a decent location for RELLIS students.
FlyingMudball
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The architecture is UGLY!
MTTANK
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We were over due a correction in that market. We dumped a rental a couple years ago. 4 bedroom rent prices were coming down, and we saw how many more rooms were coming online. Sold it for a song. The numbers don't work at current valuations. Hopefully not too many locals that bought rentals recently get hurt. The student population will catch up eventually and it will all work out.
techno-ag
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lost my dog said:

techno-ag said:

Cyp0111 said:

Techno,

They cut rent to a level that doesn't cover operating expenses and now they're pulling reserves. Banking on the ability to increase rent y-o-y. The bonds were downgrade 8
Levels...
Yup. According to the article the plan is to get them occupied then start increasing the rent. Sound plan, IMO.
Except students can always go rent elsewhere if Park West's raises the rent to an uncompetitive level.


Absolutely. Like I said, there's risk in everything. It's fun to see everybody agreeing with me on that.

Now, from a more positive perspective I think their location on campus will prove to be a draw to some students and their parents. I also think that all the "luxury" rents will rise over time as their property tax increases kick in, and Park West has another benefit there since they're tax free.
halibut sinclair
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kraut
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techno-ag said:

lost my dog said:

techno-ag said:

Cyp0111 said:

Techno,

They cut rent to a level that doesn't cover operating expenses and now they're pulling reserves. Banking on the ability to increase rent y-o-y. The bonds were downgrade 8
Levels...
Yup. According to the article the plan is to get them occupied then start increasing the rent. Sound plan, IMO.
Except students can always go rent elsewhere if Park West's raises the rent to an uncompetitive level.


Absolutely. Like I said, there's risk in everything. It's fun to see everybody agreeing with me on that.

Now, from a more positive perspective I think their location on campus will prove to be a draw to some students and their parents. I also think that all the "luxury" rents will rise over time as their property tax increases kick in, and Park West has another benefit there since they're tax free.
That, and the fact that A&M, at some point, can mandate freshmen and/or sophomores live "on campus". Problem (for A&M) solved!
Oogway
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I keep hearing this refrain and I am not sure where it is getting traction because are there 10,000+ beds for heads on campus even with Park West? The freshman classes have been close to 10,000 (actually enrolled) for at least the last four years with last fall reaching 11,000. That's a lot to house on campus. I guess A&M could mandate it in the future, but I think if RELLIS grows it will become unlikely. Those students may want to live closer in to use their sports passes and be near shopping etc.
lost my dog
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Oogway said:

I keep hearing this refrain and I am not sure where it is getting traction because are there 10,000+ beds for heads on campus even with Park West? The freshman classes have been close to 10,000 (actually enrolled) for at least the last four years with last fall reaching 11,000. That's a lot to house on campus. I guess A&M could mandate it in the future, but I think if RELLIS grows it will become unlikely. Those students may want to live closer in to use their sports passes and be near shopping etc.

It may be A&M land, but living at Park West is hardly living on campus. If I were an engineering student, I would much rather live in Northgate near my classes than way out past the athletic fields.

And sports passes for RELLIS students is hardly a done deal. They're A&M system students, not A&M CS students.
Oogway
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I was wrong- went back and read the article from The Eagle, it's the first 250 students in the inaugural class. Link below.

No, I agree that Park West is 'out there' when it comes to campus life, but I just don't see A&M having a 'freshman live on campus' mandate. Even if they have the capacity, I would be surprised, but anything is possible.



https://www.google.com/amp/www.theeagle.com/news/local/select-rellis-students-to-receive-free-texas-a-m-football/article_cf1e2884-57b5-11e8-9b7f-37ef3d5e3ec2.amp.html
AGnCS
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I am pretty sure A&M can't mandate that students live in a property that is owned/managed by a third party, even if it is on A&M land.

If I owned any other rental property in town I would be contacting a lawyer.
aggiepublius
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Sounds like the City of New Hope (pop. 614) and the P.O. Box in Alabama that keeps company with a bunch of other campus related shell corp P.O. boxes might not come out ahead on this deal.
cslifer
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And what exactly would you be asking a lawyer to do?
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