Student housing developers frequently promote projects not just by mentioning the given size of apartment units, and the availability of swimming pools and fitness centers, but also the likelihood of grocery or retail stores on the development’s ground level.
Such developers, the site WealthManagement.com has noted, dread the idea of completing a multi-use project and being left with large amounts of empty store space.
But for projects built near a campus, “retail space can add significant value.”
According to the analytics site Axiometrics, around 35% of all new student apartment projects built between 2016 and 2021 included first-floor retail.
In an article published by Due Diligence magazine, it is noted that the potential of “net income earned on the space compared to the construction costs” of the building itself, remains alluring for developers and builders, as does the visual appeal of a busy store fronting a project.
But of four multi-story student housing projects put up in the last decade in the vicinity of the University of Florida campus, all the retail space at two of those projects remains vacant, while the percentage of vacant space ranges between 54% and 83% in the other two.
Despite those numbers, developers and investors continue to see ground floor retail as a marketable asset.
In recent weeks deChase Miksis, with offices in Eugene, Oregon, announced plans to build a multi-story apartment building geared for students near the University of Oregon in Eugene that will feature first floor retail.
The Buccini/Pollin Group, a Wilmington-based developer, says it wants to build an apartment complex near the University of Delaware campus. In an interview with the Newark Post, company spokesperson Claire Neste said the project will “provide amenity-based retail that will serve both the workers on the campus as well as visitors and residents.”
CRG Acquisition of Chicago is making plans for the construction of a 10-story student housing project near the University of Wisconsin’s campus in Madison that will very much include commercial space at the ground floor corner of the structure.
Despite advertisements promoting such amenities, student housing projects around the country continue to see vacant space due to retail operations that never materialized, or stores moving out of complexes as a result of too-high rents and too-low store revenue.
In Starkville, Mississippi retail space on the first two floors of the College View apartments, which was opened in early 2019, remained empty well into 2021. The Pugh Centre in State College, Pennsylvania opened in 2020 with 6,000 square feet of retail space that has yet to be filled.
A Target shop on the ground floor of a project called The Standard near the University of Florida announced recently that it is closing what is described an “underperforming store.”
According to the Due Diligence article, the goal of successfully combining retail with apartment housing has proven all too often elusive. Despite the good intentions of building retail under apartments, “the reality is that a tremendous amount of vacant retail space is the result.”
By Garry Boulard
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