How much is too much? New student housing catalyzes Michigan Avenue development

Everywhere you look near Michigan State University, developers seem to be doubling down on luxury housing geared toward college students.

East Lansing just dusted off the new 12-story Landmark apartment building above a small Target store and new parking garage this August with 273 units geared both toward students and recent college graduates. Down the street, the 10-story The Hub opened to students this school year with 347 units and a rooftop pool, and developers told city officials they plan to build another.

New apartments line Hagadorn Road in Meridian Township, and Skyvue Apartments opened two years ago to the west on Michigan Avenue, just inside the city of Lansing.

Across the road lies the most ambitious project yet: the Red Cedar golf course development, where another 1,100 student beds are planned, along with a host of other amenities and environmental cleanup of the polluted Montgomery Drain into the Red Cedar River.

The question it all poses is, how long can this building boom last? And what’s to happen to other student housing complexes on the north edge of the city? Is East Lansing headed for a bust?

Trezise: Future > Past

Bob Trezise, president and CEO of the Lansing Economic Area Partnership, or LEAP, says no. “There probably is a student housing bubble but I think it’s a much more nuanced issue than that.”

Trezise has a vision of rejuvenation built along a corridor from MSU to the state Capitol, with two bustling downtowns at each end for Lansing and East Lansing. “I like the future. I don’t like the past.”

As Chicago and coastal cities grow too expensive, Trezise says he sees more college graduates sticking around East Lansing and Lansing, especially the northeast quadrant of the city. Ever the booster for his lifelong hometown, he sees the greater Lansing area moving only in one direction, both figuratively and literally — up.

He said the closer housing is built near campus and downtown East Lansing, the more lucrative is and the higher the rent. Apartments built farther away from campus — especially to the north, like Chandler Crossing in Bath Township — will have to reinvent themselves but will still provide a critical need and help keep housing costs down while providing a decent rate of return for apartment managers and landlords.

“Some of it was built wrong. It’s too far away. It’s not walkable. It’s not dense,” Trezise said. “It needs to be squeezed close to Michigan State University to be fully integrated into the campus itself.”

“It’s a lovely housing area for non-students. We need a lot of housing for young professionals. I think they’ll be fine. I think they’ll be less and less marketed as student housing.”

The increased density will be a win for the core cities, a win for the region and a win for the environment, reducing urban sprawl and lowering the area’s carbon footprint.

Landmark felt like the perfect fit for McKain Williams, a senior neuroscience major at MSU, after a year spent in a slummy rental house about three-fourths of a mile from campus. “I wanted somewhere to live that had new appliances and wouldn’t leak and was furnished at a high level,” said Williams, who splits a $2,400 three-bedroom apartment with two roommates. “The management actually does things here.”

Steve Willobee, a spokesman for Harbor Bay, the Illinois developer of the Landmark, says they not only erected the building at the center of East Lansing, they have remained to take care of the property. “We manage the asset ourselves.”

Despite complaints from local businesses about the construction, Willobee said the 12-story development was completed in under two years. A city parking lot was replaced with a 600-space city parking garage, and the 91-unit Newman Lofts luxury apartments for active adults and older opened Oct. 1 at the rear of the block along Albert Avenue.

“A lot of people are moving back to their alma mater and living downtown,” Willobee said. “There’s a lot of love for Michigan State University.”

Enrollment slackens

Student enrollment at Michigan State University hit a record high in 2018-2019, growing along with the University of Michigan, even as almost all of the smaller, regional public colleges like Central Michigan University and Saginaw State University have been dropping — Saginaw by 10 percent since 2008 and CMU by 20 percent in that time.

The number of Michigan high school graduates has been dropping and they’re about to take a big plunge. Michigan had 104,000 Michigan high school graduates in 2018. By 2032, that number will drop to 84,000, according to Western Interstate Commission for Higher Education.

Other universities, such as Northern Michigan University and Lake Superior State University, are working to reverse their decline with trendy new offerings, such as a medicinal plant chemistry program to help the state’s budding marijuana industry become more professional and science-based.

MSU has mostly counteracted declining Michigan graduates with an increase in out-of-state and international students, especially from China.

A candidate for East Lansing City Council, John Revitte, is more pessimistic than civic boosters like Trezise — or Mayor Mark Meadows, who led the way for more vertical downtown development in East Lansing. Revitte, a retired labor relations professor, says President Trump’s trade war and hostility toward foreigners, especially China and the Middle East, will make recruitment of international students harder to achieve in years to come.

He said the university’s handling of the Larry Nassar sexual assault scandal is also tarnishing the university’s image and driving students away.

“Lower rents are a great thing for the students, don’t get me wrong,” Revitte said. “I don’t know anybody who thinks there will be this big growth in international students.”

Revitte called for a moratorium on new high-rise apartments in East Lansing until the city government can study comparable cities and East Lansing’s housing market to know they won't get a glut. He prefers a planned thoughtful approach to the more laissez-faire market environment favored by developers.

One big benefit Revitte sees as a Bailey Neighborhood homeowner and East Lansing townie is the reduced pressure to convert older single-family houses into subdivided rentals for students. “There’s a tipping point when a neighborhood becomes so dominated by rentals that things change. Landlords don’t keep up the properties.”

University officials have been circumspect and equivocating in their assessment of the situation. At a Board of Trustees meeting earlier this month, officials reported that as of Sept. 23, MSU welcomed 8,570 new undergraduates — a figure it touted as the largest number of new undergraduates ever.

But overall numbers of students for both graduates and undergraduates dipped 1.1 percent, as more undergraduates dropped out or transferred than came in and the total number of students dropped from 50,351 in 2018-2019 to 49,809 for 2019-2020.

Undergraduates fell from 39,423 to 39,176 and graduate students fell from 10,928 to 10,633.

University disputes need

In 2016, even before student enrollment crested above 50,000, the disgraced former MSU President Lou Anna Simon told local officials that there was no more need for off-campus housing. A university official did not provide updated information when requested.

Of course, Simon had a dog in the hunt. Off-campus housing competes directly with pricey on-campus housing. In the 2018-2019 school year, the average student spent more than $10,000 to live on-campus. That includes about $5,900 for food as well as $4,200 for a room, but students can easily save $2,000 or more living off-campus for nine months if they prepare some of their own meals.

The university is phasing out its aging Spartan Village apartments and offering the new $157 million 1855 Place apartment-style housing on the western side of campus, with studio, two-bedroom and four-bedroom apartments ranging from $785 to $995 per room, not including a meal plan, which is optional for this style of housing.

According to U.S. News and World Report, 39% of MSU undergraduate students live on campus and 61% off-campus. Freshmen and most sophomores are required to live on campus and are guaranteed a spot. The university offers co-ed and women-only dorms, apartments cooperative housing and special housing for disabled students.

Off-campus apartments in East Lansing can range from just $295 a month at The Pines Apartments in the 1800 block of Abbott Road about a mile and a half north of campus to a 10-bedroom house for $8,400 in the Bailey neighborhood near campus, according to rental listing site Trulia.

Rental prices do tend to climb closer to campus. The furnished Campus Gate Apartments across Grand River Avenue from the Broad Museum go for $2,600 to $3,600 a month for four-to-five bedroom units. Almost three miles north of campus inland East Lansing annexed from Bath Township, a two-to-four bedroom unit in  The Landings at Chandler Crossing can be snatched for $454 to $639 a month.

A good sign that more development is a good bet: the average rental price in East Lansing is almost $1,300 a month — lower than the national average, but about a third higher than the state average of $1,000 a month, according to the latest monthly Michigan Rent Report compiled by Rent Cafe based on surveys of large apartment complexes. The average rent in East Lansing also fell about 1 percent from 2018 to 2019.

Only four Michigan cities, including Allendale and Ann Arbor have higher average rents than East Lansing, and it costs about twice as much to rent a place in East Lansing than in Flint or Muskegon. Rents in Lansing average $880 a month.

Mayor wants study

Meadows has been largely supportive of the new development and the promise it holds to bring down rent prices for students, young professionals and young families as the old law of supply and demand holds true.

“I would like to know where people are coming from,” said Meadows, who has called for a housing analysis of East Lansing’s recent developments. “There’s been a lot of housing built close to campus.”

Red Cedar Project Manager Christopher Stralkowski said student housing is seen as recession-proof: In hard times, people are more likely to head to the university for more education than enter the workforce.

“We’re not competing with Chandler Crossing. We’re not three miles away from campus. We’re next to campus,” he said. “They were the newest 20 years ago. Students tend to like the new product.”

Continental Ferguson’s Red Cedar development, with 1,100 beds, plans to be ready for the 2021-2022 school year.