a student housing market feasibility study for minnesota€¦ · a student housing market...

A Student Housing Market Feasibility Study for Minnesota West

Community & Technical College in Worthington, Minnesota

Prepared for:

Minnesota State Colleges and Universities St. Paul, Minnesota

January 2013

1221 Nicollet Mall Suite 218 Minneapolis, MN 55403612.338.0012

(main) 612‐338‐0012 (fax) 612‐904‐7979 1221 Nicollet Mall, Suite 218, Minneapolis, MN 55403

www.maxfieldresearch.com

January 17, 2013 Mr. Gregory Ewig Director, Capital Development Minnesota State Colleges and Universities Wells Fargo Place 30 7th Street E, Suite 350 St. Paul, MN 55101‐7804 Dear Mr. Ewig: Attached is the analysis titled, “A Student Housing Market Feasibility Study for Minnesota West Community & Technical College, in Worthington, Minnesota”. This market analysis examines characteristics of Minnesota West students, the traditional rental housing market in Worthing‐ton, findings obtained during focus group sessions, student housing demand projections, and recommendations for a student housing rental development. Based on our assessment of student demographics and characteristics, the existing supply of rental housing in the City, and comments from students during the focus group sessions, we find that demand exists for additional student rental housing in Worthington. Maxfield Re‐search recommends the development of 34 units resulting in 105 beds. Please contact us if you have questions or require additional information. Sincerely, MAXFIELD RESEARCH INC. Matt Mullins Amanda Janzen Vice President Market Analyst Attachment

TABLE OF CONTENTS

Page EXECUTIVE SUMMARY .................................................................................................. 1 PURPOSE AND SCOPE OF STUDY ................................................................................... 5 STUDENT CHARACTERISTICS AND ENROLLMENT TRENDS ............................................. 6

Student Enrollment Trends ............................................................................................ 6 Student Characteristics .................................................................................................. 11 Growth in College‐Age Population ................................................................................ 17 High School Graduation Trends ..................................................................................... 19

RENTAL MARKET ANALYSIS .......................................................................................... 21

Introduction ................................................................................................................... 21 Rental Housing Market .................................................................................................. 21 Pending Rental Developments ....................................................................................... 27

FOCUS GROUP SUMMARY ............................................................................................ 29

Introduction ................................................................................................................... 29 Why Choose Mn West? ................................................................................................. 30 Finding Housing .............................................................................................................. 30 Current City Residence ................................................................................................... 31 Housing Types ................................................................................................................ 31 Positive Features of Current Housing Situation ............................................................. 32 Negative Features of Current Housing Situation ........................................................... 32 Housing Costs and Lease Terms ..................................................................................... 33 Housing Features and Amenities ................................................................................... 33 Top Priorities .................................................................................................................. 35 What Students are Willing to Pay for Rent .................................................................... 36 Summary ........................................................................................................................ 36

DEMAND ANALYSIS ...................................................................................................... 38

Introduction ................................................................................................................... 38 Demand Calculations ..................................................................................................... 38

CONCLUSIONS AND RECOMMENDATIONS.................................................................... 41

Introduction ................................................................................................................... 41 Student Housing Industry Trends .................................................................................. 41 Public/Private Student Housing Partnership Overview ................................................. 43 Recommendations ......................................................................................................... 46

APPENDIX .................................................................................................................... 49 Worthington Focus Group Presentation ....................................................................... 50

LIST OF TABLES Table Number and Title Page 1. Historic Enrollment, MWCTC‐Worthington, 2000‐2012 .................................................. 6 2. Historic Full Time Enrollment, MWCTC‐Worthington, 2000 ‐ 2012 ................................ 8 3. Full Time Enrollment, New vs Returning Students, MWCTC‐Worthington, 2000 ‐ 2012 10 4. Historic Enrollment, Gender Distribution, MWCTC – Worthington, 2005 ‐ 2012 ........... 11 5. Historic Enrollment, Ethnicity, MWCTC‐Worthington, 2005 ‐ 2012 ................................ 12 6. Historic Enrollment by Age of Student, MWCTC – Worthington, 2005 ‐ 2012 ............... 13 7. Geographic Origin, MWCTC Worthington, Fall 2012 ....................................................... 15 8. College‐Age Population Trends, 2000 to 2030 ................................................................ 18 9. Projected High School Graduates, Minnesota, 2002 to 2020 ......................................... 20 10. Rental Housing Projects, Worthington, October 2012 .................................................... 22 11. Existing Rental Projects Unit Mix, Worthington, October 2012 ...................................... 26 12. Projected Demand for New Rental Units, MWCTC – Worthington, 2012 ‐ 2020 ........... 39 13. Preliminary Unit Mix/Size/Rent Recommendations, Mn West Worthington, January 2013 46

EXECUTIVE SUMMARY

MAXFIELD RESEARCH INC. 1

Purpose and Scope of Study

Maxfield Research Inc. was engaged by Minnesota State Colleges and Universities (the “Client”) to conduct a student housing market and feasibility study for the Minnesota West Community and Technical College campus in Worthington, Minnesota. The scope of this study includes: an assessment of student characteristics; enrollment trends; an analysis of the traditional rental housing market in Worthington; a review of the existing housing search process; a summary of findings obtained during focus group sessions; student hous‐ing demand projections; and, recommendations for the mix, size, and rents for student housing rental units along with suggestions for unit features and common area amenities.

Student Characteristics and Enrollment Trends

MWCTC’s enrollment has steadily increased since 2000 with peak enrollment during the 2006‐2007 school year (1,123 students in fall 2006). Enrollment has decreased ‐13% be‐tween fall 2006 and fall 2012. However, fall 2012 enrollment has increased 72 students from the previous fall semester. There were 979 students enrolled at MWCTC as of fall 2012.

While MWCTC’s total enrollment declined roughly ‐13% from fall 2006 to fall 2012, full‐time enrollment experienced a larger drop, declining ‐26.2% during the same time period. How‐ever, part‐time enrollment increased 1.7%. As of fall 2012, approximately 44% of students are full‐time and 56% are part‐time.

The majority of students at MWCTC self‐identify as being White, representing 71.5% of the student body in fall 2012. Students self‐identifying as Black are the second most common ethnicity, representing 9.5% of the student body in fall 2012. The proportion of White stu‐dents has declined in recent years, dropping from a high of 76.2% in fall 2007 to a low of 65.5% in fall 2011, before increasing slightly to 71.5% in fall 2012. Proportions of all other ethnicities experienced slight increases between 2005 and 2012.

About 35% of the student population is between the ages of 18 and 20. The 17 and younger age group is the second largest age cohort, representing 23% of total enrollment in fall 2012. These two cohorts have consistently represented the largest proportion of the stu‐dent body.

Roughly 89% of the MWCTC students are from Minnesota. The next largest group is from South Dakota (3.6%) and Iowa (1.8%). Approximately 2.8% of the student body came from outside the Midwest. It appears that roughly 57% of the student body originates from an area that is within a 45‐minute drive from campus.

EXECUTIVE SUMMARY


Over the past ten years, the number of public high school graduates in Minnesota has been hovering around 59,000 students, peaking in 2008 at 60,586. The number of graduates is has been slowly tapering off since 2008 and is projected to continue sliding through 2015. The number is expected to hold steady for three years, before increasing modestly during the final three years of the decade. Between 2010 and 2020, the number of high school graduates in Minnesota is expected to decline by ‐5.0%. Minority students will comprise a larger share of high school graduates in the future. The number of nonwhite graduates is projected to grow roughly 30% between 2010 and 2020 while the number of white gradu‐ates declines ‐12%.

Rental Market Analysis In total, we obtained information for 18 apartment properties with 509 units in Worthing‐

ton. Of these, 376 units in 13 developments are located less than more than two miles from the MWCTC campus while only 99 units in three projects are located less than one mile away from campus.

Vacancy within these rental projects is very tight as no units were available. The equilibri‐um vacancy rate for rental housing is considered to be 5.0% which allows for normal turno‐ver and an adequate supply of alternatives for prospective renters. In essence, there is a shortage of available rental units in Worthington.

The average rental rate across all properties is $491 per month. One‐bedroom units have an average rent of $485 per month, two‐bedroom units average $595, and three‐bedroom units average $555.

The largest concentration of students is located in the projects closest to campus (Campus View Apartments and Golf Park Apartments). Campus View Apartments has approximately 84 students occupying the 104 bedrooms. We were unable to reach Golf Park Apartments; however, based on student focus groups, approximately 75% to 80% of the residents are students.

The Worthington Area Chamber of Commerce maintains an apartment list that is updated annually. Staff in Admissions will hand out this brochure to students looking for housing. The Admissions Office also keeps a separate list for people calling to advertise their home for rent. MWCTC will only post the rentals and does not inspect or screen any of the hous‐ing on the list, nor does the school arrange roommates.

EXECUTIVE SUMMARY


Focus Group Summary

Overall, students are frustrated by the lack and condition of housing in Worthington that would target students attending MWCTC. Many students are unable to find housing that meets their needs and are forced to live in subpar conditions until something becomes available.

While students desire certain features in the housing, most just want a clean, decent place to live that will be priced at a reasonable amount and will provide them with basic features such as dedicated surface parking with plug‐ins, air conditioning, laundry, private bedroom, one bathroom for two people, internet and basic cable TV. Additional features are desired, but not necessarily required.

The lack of housing has also affected the ability to recruit for some academic and athletic programs. Many coaches commented that they have lost recruits due to lack of housing for student athletes.

Students are conscious of the money they pay for rent and what they expect to receive for their rent dollars. Students would be willing to pay a premium of about $100 per month for new housing. Most students would be willing to pay between $350 to $500 per month if the rent included utilities, basic cable, and internet. Students stressed that anything over more than $500 per student would be too expensive.

Location of a new apartment complex is critical. Students desire housing as close as possi‐ble to campus. Most students would prefer if new housing was on campus grounds versus off‐campus. Students also prefer the idea of a MWCTC managed building versus a third par‐ty property management company that is unaffiliated with the college.

Although students want their own kitchen in the unit, many students desire the availability to purchase additional meals from a cafeteria.

Demand Analysis

Factors considered include projected changes in the number of students graduating from high school in Minnesota, current and projected NCTC enrollment, the geographic origin of the full‐time student population, and the supply of rental properties in the City.

Subtracting the estimated number of students in rental housing from the projected number of students requiring local housing results in a calculation for excess student housing de‐mand. In 2012, we estimate that there is excess demand for 101 bedrooms. In 2013, there is expected to be excess demand for 98 bedrooms. Excess demand is expected to climb to a range of 91 to 111 bedrooms by 2020.

EXECUTIVE SUMMARY


As indicated by the very low 0.0% vacancy rate in the Worthington apartment market, there is pent‐up demand for rental housing throughout the community. The development of ad‐ditional student housing would likely pull some students out of the general occupancy rent‐al market, opening up some traditional apartment units and providing additional housing options for area residents.

Conclusions and Recommendations

Students across the State and in other areas of the Country frequently mention the follow‐ing preferences regarding their housing: more privacy; ability to choose the people they live with; internet and wireless access; purchasing and preparing their own food; fewer roommates overall; and, close proximity to the campus with convenient access to campus facilities and activities.

College and university leaders are exploring public/private partnerships as a means of financing new on‐ and off‐campus housing facilities. These partnerships recognize that while student housing plays an important role on campus, it is not necessarily always one of the institution’s core competencies. The roles of a public/private partnership can vary greatly for each party involved. Typically, the size, scope, and experience of the institution’s staff will dictate the depth of involvement for both parties in the partnership. There are various types of public‐private partnerships that have been implemented at other colleges and universities across the country, including; referrals, affiliations, structured/foundation‐owned, joint ownership, and private‐public‐municipal partnerships.

Based on our assessment of student demographics and characteristics, the existing supply of rental housing in Worthington, and comments from students during the focus group ses‐sions, we find that demand exists for additional student rental housing, preferably close to MWCTC. Based on our unit mix recommendations (25% two‐bedroom, 40% three‐bedroom, and 35% four‐bedroom), a 35‐unit project would create 105 new bedrooms.

Proposed average rent ranges from $331 to $394 per bedroom. The proposed rents are higher than existing apartment developments, but students indicated that they will pay a premium for new construction and for proximity to campus.

We understand that MWCTC has ample land that could be subdivided for future student housing. Because of the excess land availability, we recommend setting aside additional land for future housing development should the need arise. Based on the success of the first phase, future apartment‐style buildings could be constructed adjacent to the property and adjusted based on market preferences.

The following unit features and common amenities should be included: lockable bedrooms; full kitchen appliance packages; central air conditioning; location within easy walking dis‐

EXECUTIVE SUMMARY


tance to the school; dedicated parking (surface parking with plug‐ins or garages) on‐site laundry room; furnished units, utilities, basic cable TV, and internet (and/or Wi‐Fi) included in the monthly rent; Community lounge area with large screen TV and a quiet study lounge; and, secure access to the building.

PUROPOSE AND SCOPE


Purpose and Scope of Study Maxfield Research Inc. was engaged by Minnesota State Colleges and Universities (the “Client”) to conduct a student housing market and feasibility study for the Minnesota West Community and Technical College campus in Worthington, Minnesota. The scope of this study includes: an assessment of student characteristics; enrollment trends; an analysis of the traditional rental housing market in Worthington; a review of the existing housing search process; a summary of findings obtained during focus group sessions; student housing demand projections; and, recommendations for the mix, size, and rents for student housing rental units along with suggestions for unit features and common area amenities. This report includes both primary and secondary research. Primary research includes inter‐views with local officials and focus group sessions. Secondary research is credited to the source when used, and is usually data from the U.S. Census or regional planning agencies. Secondary research is always used as a basis for analysis, and is carefully reviewed in light of other factors that may impact projections such as pending rental developments. All of the information on existing and pending developments was gathered by Maxfield Research Inc. and is accurate to the best of our knowledge.

STUDENT CHARACTERISTICS AND ENROLLMENT TRENDS


Student Enrollment Trends Historic Enrollment Table 1 presents data on historic headcount enrollment for students of the Minnesota West Community and Technical College (MWCTC or MnWest) in Worthington from school year 2000‐2001 to 2012‐2013.

MWCTC’s enrollment has steadily increased since 2000 with peak enrollment during the 2006‐2007 school year. Enrollment has decreased ‐19% between fall 2006 and fall 2011 and ‐26% between spring 2007 and spring 2012. However, 2012 fall enrollment has increased by 72 students from the previous fall semester.

Between Fiscal Year (FY) 2005 and 2012, the Colleges and Universities under the jurisdiction of the MnSCU system reported an overall enrollment increase of over 13%, from 135,494 in FY 2005 to 153,521 in 2012. The largest yearly percentage increase occurred during FY 2010, increasing by +8.0%.

YearFall Spring Summer

2000‐2001 751 795 3702001‐2002 848 814 4462002‐2003 1,002 1,036 4472003‐2004 1,077 1,049 4582004‐2005 1,035 1,074 4562005‐2006 1,111 1,154 4722006‐2007 1,123 1,241 4662007‐2008 1,138 1,126 4342008‐2009 1,157 1,037 3692009‐2010 1,031 1,034 3382010‐2011 978 950 3412011‐2012 907 915 3042012‐2013 979 ‐‐ ‐‐

Sources: MnSCU; Maxfield Research Inc.

Semester

Table 1HISTORIC ENROLLMENT

2000 ‐ 2012MWCTC, WORTHINGTON



Full‐Time vs. Part‐Time Table 2 shows enrollment data from school year 2000‐2001 to fall 2012 broken out by full‐time and part‐time status. The following are key points from the table.

MWCTC’s enrollment declined roughly ‐13% from fall 2006 to fall 2012. Enrollment of full‐time students experienced a larger drop, declining ‐26.2% during that time period, from 584 in fall 2006 to 431 in fall 2012. However, part‐time enrollment increased 1.7% from 539 to 548 students in the same time period.

The proportion of full‐time students has declined steadily in recent years, from 57% in fall 2005 to 44% in fall 2012.

A greater proportion of students enrolled in spring semester are part‐time students. Approximately 52% of students were part‐time students in fall 2011 compared to 60% in spring 2012.

The majority of students (over 95% since 2005) enrolled in summer classes are part‐time students.



Year

Full‐Time % of Total Part‐Time % of Total Full‐Time % of Total Part‐Time % of Total Full‐Time % of Total Part‐Time % of Total

2000‐2001 444 59% 307 41% 433 54% 362 46% 12 3% 358 97%2001‐2002 490 58% 358 42% 443 54% 371 46% 17 4% 429 96%2002‐2003 526 52% 476 48% 491 47% 545 53% 27 6% 420 94%2003‐2004 591 55% 486 45% 591 56% 458 44% 73 16% 385 84%2004‐2005 588 57% 447 43% 583 54% 491 46% 29 6% 427 94%2005‐2006 638 57% 473 43% 591 51% 563 49% 11 2% 461 98%2006‐2007 584 52% 539 48% 559 45% 682 55% 12 3% 454 97%2007‐2008 601 53% 537 47% 570 51% 556 49% 22 5% 412 95%2008‐2009 603 52% 554 48% 563 54% 474 46% 12 3% 357 97%2009‐2010 536 52% 495 48% 511 49% 523 51% 16 5% 322 95%2010‐2011 551 56% 427 44% 457 48% 493 52% 14 4% 327 96%2011‐2012 434 48% 473 52% 370 40% 545 60% 12 4% 292 96%2012‐2013 431 44% 548 56% ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ ‐‐


Fall Spring Summer

Table 2HISTORIC FULL‐TIME ENROLLMENT

MWCTC, WORTHINGTON2000 ‐ 2012

Semester



New vs. Returning Full‐Time Students Table 3 further delineates the historic enrollment data by distinguishing between new and returning full‐time students.

The number of new students (new freshmen and new transfer students) enrolling at MWCTC has fluctuated over the years, with a high of 247 in fall 2005 and a low of 151 in fall 2011.

The number of returning full‐time students (returning freshmen and sophomores) has been declining drastically since 2010. Historically, there have been about 100 more returning full‐time students than new students. However as of fall 2012, the number of new students is almost equal to returning students (183 new students compared to 210 returning stu‐dents).

YearNew

Freshmen

Returning

Freshmen

Returning

Sophomores

New

TransfersTotal

Fall 2000 154 38 165 27 384Fall 2001 151 50 207 27 435Fall 2002 167 39 230 44 480Fall 2003 177 51 269 46 543Fall 2004 190 45 276 38 549Fall 2005 178 45 307 69 599Fall 2006 159 47 290 60 556Fall 2007 173 46 282 62 563Fall 2008 152 51 285 54 542Fall 2009 126 47 240 71 484Fall 2010 144 54 236 69 503Fall 2011 91 46 208 60 405Fall 2012 132 66 144 51 393

* Non‐degree seeking students and PSEO have been excluded


Table 3

MWCTC, WORTHINGTONFULL‐TIME ENROLLMENT, NEW VS. RETURNING STUDENTS

FALL 2000 ‐ FALL 2012



Student Characteristics Gender Distribution

As of fall 2012, approximately 54% of students enrolled at MWCTC are female, 43% are male, and 3% are unknown.

The 2012 gender distribution is fairly consistent with historic enrollment trends, as the student body has been predominantly female since fall 2005. On average, roughly 60% of the student body has been female between fall 2005 and fall 2012.

Year Total Male

% of

Total Female

% of

Total Unknown

% of

Total

Fall 2012 979 425 43% 527 54% 27 3%Fall 2011 907 354 39% 542 60% 11 1%Fall 2010 979 436 45% 528 54% 15 2%Fall 2009 1,032 410 40% 617 60% 5 0%Fall 2008 1,157 468 40% 661 57% 28 2%Fall 2007 1,139 383 34% 687 60% 69 6%Fall 2006 1,125 369 33% 717 64% 39 3%Fall 2005 1,113 385 35% 721 65% 7 1%

Sources: MnSCU; Maxfield Research, Inc.

TABLE 4HISTORIC ENROLLMENT, GENDER DISTRIBUTION

MWCTC, WORTHINGTONFALL 2005 ‐ FALL 2012



Ethnicity

As illustrated in Table 5 and the graph that follows, the majority of students at MWCTC self‐identify as being White, representing 71.5% of the student body in fall 2012. Students self‐identifying as Black are the second most common ethnicity, representing 9.5% of the stu‐dent body in fall 2012.

The proportion of White students has fluctuated in recent years, dropping from a high of 76.2% in fall 2007 to a low of 65.5% in fall 2011, before increasing slightly to 71.5% in fall 2012. Proportions of all other ethnicities experienced slight increases between 2005 and 2012. The proportion of Black students increased from 7.6% in 2005 (66 students) to 9.5% in 2012 (93 students). The Hispanic student population increased +65% during that time period, from 49 students in 2005 to 81 students in 2012.

# % # % # % # % # % # % # % Fall 2012 38 3.9% 93 9.5% 81 8.3% 14 1.4% 2 0.2% 700 71.5% 51 5.2%Fall 2011 37 5.6% 89 13.4% 64 9.6% 2 0.3% 2 0.3% 436 65.5% 36 5.4%Fall 2010 25 3.6% 107 15.5% 67 9.7% 3 0.4% 1 0.1% 458 66.2% 31 4.5%Fall 2009 33 4.5% 59 8.0% 60 8.2% 4 0.5% 8 1.1% 531 72.1% 41 5.6%Fall 2008 31 3.8% 52 6.3% 53 6.4% 4 0.5% 6 0.7% 608 74.0% 68 8.3%Fall 2007 26 3.0% 63 7.2% 49 5.6% 5 0.6% 8 0.9% 665 76.2% 57 6.5%Fall 2006 24 2.7% 61 7.0% 51 5.8% 3 0.3% 5 0.6% 620 70.7% 113 12.9%Fall 2005 20 2.3% 66 7.6% 49 5.7% 3 0.3% 9 1.0% 627 72.7% 89 10.3%


White Unknown

TABLE 5HISTORIC ENROLLMENT, ETHNICITY


Asian Black Hispanic Am. Ind./Ala. Pacific Isl.



Age of Students

Roughly 35.4% of the student body is between the ages of 18 and 20. The 17 and younger age group is the second largest age cohort, representing 23.2% of total enrollment. The 17 and younger age group experienced the largest increase in enrollment (+68%), growing from 270 students (12.1%) in fall 2005 to 454 (35%) in 2012.

Students ages 40 or older comprise the smallest percentage of the student body. The 40 and older age group has experienced a significant drop in enrollment, dropping from 250 students in fall 2005 to 130 students in fall 2012.

No Pct. No Pct. No Pct. No Pct. No Pct. No Pct. No Pct.Fall 2012 454 23.2% 694 35.4% 256 13.1% 214 10.9% 208 10.6% 130 6.6% 2 0.1%Fall 2011 288 15.9% 602 33.2% 304 16.8% 228 12.6% 222 12.2% 168 9.3% 2 0.1%Fall 2010 344 17.6% 744 38.0% 276 14.1% 218 11.1% 218 11.1% 150 7.7% 8 0.4%Fall 2009 502 24.3% 698 33.8% 276 13.4% 248 12.0% 180 8.7% 152 7.4% 8 0.4%Fall 2008 578 25.0% 784 33.9% 314 13.6% 232 10.0% 218 9.4% 174 7.5% 14 0.6%Fall 2007 352 15.5% 784 34.4% 360 15.8% 238 10.4% 266 11.7% 220 9.7% 58 2.5%Fall 2006 292 13.0% 744 33.1% 378 16.8% 238 10.6% 288 12.8% 264 11.7% 46 2.0%Fall 2005 270 12.1% 808 36.3% 360 16.2% 202 9.1% 282 12.7% 250 11.2% 54 2.4%


TABLE 6HISTORIC ENROLLMENT BY AGE OF STUDENT


40 and over Unknown17‐Under 18 to 20 21 to 24 25 to 29 30 to 39



Geographic Origin Table 7 shows the geographic origin of students attending classes on the MWCTC campus in fall 2012. The data is presented for each of the 11 economic regions in Minnesota (see accompany‐ing map below) as well as several other states.

The vast majority (roughly 89%) of MWCTC students are from Minnesota. The next largest groups are from South Dakota (3.6%), and Iowa (1.8%). Approximately 2.8% of the student population came from outside the Midwest.

MWCTC’s draw area is very localized as approximately 70% of MWCTC’s Minnesota students came from Region 8 (Southwest). The Twin Cities Metro Area (Region 11) had the second highest percentage at 6.8%.

Based on a drive‐time analysis, it appears that roughly 57% of the student body originates from an area that is within a 45‐minute drive from campus. Essentially all of Nobles County and Jackson County are within a 45‐minute drive from campus. Based on the size and geo‐graphic orientation of surrounding counties, we assume that roughly half of the students from Murray County and Cottonwood County, and all of the students from Rock County and Osceola County, Iowa originate from an area that is within 45 minutes from campus.

Northwest, 0.1%Headwaters,

0.1%Arrowhead,

0.6%West Central,

0.3%

North Central, 0.5%

Mid‐Minnesota,

2.0%

East Central , 2.1%

Southwest, 70.3%

South Central, 5.6%

Southeast, 1.3%

Twin Cities, 6.0%

All Other States, 10.9%

Geographic Origin MWCTC, Worthington



Economic Regions of Minnesota



Minnesota/Region No. Pct.

Northwest (1) 1 0.1Headwaters (2) 1 0.1Arrowhead (3) 6 0.6West Central (4) 3 0.3North Central (5) 5 0.5Mid‐Minnesota (6) 20 2.0East Central (7) 21 2.1Southwest (8) 688 70.3

Cottonwood County 63 6.4Jackson County 59 6.0Lincoln County 10 1.0Lyon County 29 3.0Murray County 51 5.2Nobles County 337 34.4Pipestone County 21 2.1Redwood County 15 1.5Rock County 103 10.5

South Central (9) 55 5.6Southeast (10) 13 1.3Twin Cities Area (11) 59 6.0Minnesota Total 872 89.1

Other States No. Pct.

Alabama 6 0.6Florida 9 0.9Iowa 18 1.8Illinois 1 0.1Kentucky 1 0.1Maryland 3 0.3Michigan 9 0.9Missori 4 0.4North Carolina 2 0.2Nebraska 9 0.9Ohio 2 0.2South Carolina 1 0.1South Dakota 35 3.6Virginia 1 0.1Wisconsin 5 0.5Wyoming 1 0.1Other States Total 107 10.9

Grand Total 979 100.0

Source: MnSCU, Maxfield Research, Inc.

Note: A map of Minnesota's Economic Regions is included

on the following page

TABLE 7GEOGRAPHIC ORIGIN

MWCTC, WORTHINGTONFALL 2012

Total Students



Growth in College‐Age Population Table 8 displays the recent and projected growth in the college‐age population (persons age 15 to 24) for Region 8 (Southwest Minnesota), the 7‐County Twin Cities Metropolitan Area (Region 11) and the State of Minnesota from 2000 to 2030. Region 8 includes the Counties of: Cotton‐wood, Jackson, Lincoln, Lyon, Murray, Nobles, Pipestone, Redwood, and Rock (see accompany‐ing map on the following page). Data from 2000 and 2010 is from the U.S. Census. The 2005 estimate and projections are from the Minnesota State Demographer’s Office and are only available in five‐year age cohorts.

Census data reveals that the college‐age population grew 3.8% between 2000 and 2010 in Minnesota, adding 26,635 people in the 15 to 24 age group. The Twin Cities Metro area ex‐perienced larger growth in these cohorts during the decade, adding 26,201 people (+7.3%). The Southwest Region of Minnesota, however, experienced a ‐7.7% decline in the age 15 to 24 population, after losing 1,258 people.

The population growth projections reveal that the number of people between the ages of 15 and 24 will continue to decrease in Southwest Minnesota this decade, with a projected loss of ‐1,645 people (‐10.9%).

Southwest Minnesota represented 2.1% of Minnesota’s 15 to 24 age group in 2010, down from 2.3% in 2000. This proportion is expected to decline steadily to 1.8% in 2025, before experiencing an uptick to 2.0% between 2025 and 2030.



The Twin Cities Metro Area accounted for 51.3% of the State’s age 15 to 24 population in 2000, increasing to 53.0% in 2010. Between 2010 and 2020, the proportion of Minnesota’s age 15 to 24 population living in the Metro Area is expected to reach 55.3%.

Statewide, the 15 to 24 age group is expected to increase by 3.2% (+23,178 people) be‐tween 2010 and 2020 while the Twin Cities Metro Area college‐age population grows by 7.6% (+29,159 people).

The State’s 15 to 19 age cohort is expected to increase by 22,156 people (+6.0%) between 2010 and 2020, while the 20 to 24 age cohort will increase by only 1,022 people (0.3%). The 15 to 19 age group is projected to decline ‐1.2% between 2010 and 2015, before growing 7.4% during the second half of the decade. Conversely, the 20 to 24 age group is expected to experience +1.2% growth from 2010 to 2015 and then decline ‐0.9% between 2015 and 2020.

Age: 2000 2005 2010 2015 2020 2025 2030

15‐19 9,758 8,583 8,156 7,398 7,865 8,132 9,075

20‐24 6,605 8,341 6,949 5,864 5,595 6,129 6,335

Total 15‐24 16,363 16,924 15,105 13,262 13,460 14,261 15,410

% Change ‐‐ 3.4% ‐10.7% ‐12.2% 1.5% 6.0% 8.1%

% of State 2.3% 2.2% 2.1% 1.8% 1.8% 1.8% 2.0%

Age: 2000 2005 2010 2015 2020 2025 2030

15‐19 183,491 191,398 193,289 195,322 209,167 205,662 206,471

20‐24 173,732 184,084 190,135 205,036 203,416 213,707 204,713

Total 15‐24 357,223 375,482 383,424 400,358 412,583 419,369 411,184

% Change ‐‐ 5.1% 2.1% 4.4% 3.1% 1.6% ‐2.0%

% of State 51.3% 49.6% 53.0% 55.4% 55.3% 54.1% 52.2%

Age: 2000 2005 2010 2015 2020 2025 2030

15‐19 374,362 375,222 367,829 363,242 389,985 395,825 409,115

20‐24 322,483 382,106 355,651 359,903 356,673 379,756 378,759

Total 15‐24 696,845 757,328 723,480 723,145 746,658 775,581 787,874

% Change ‐‐ 8.7% ‐4.5% 0.0% 3.3% 3.9% 1.6%

Sources: MN State Demographic Center; US Census; ESRI; Maxfield Research, Inc.

Minnesota

TABLE 8

COLLEGE‐AGE POPULATION TRENDS

2000 to 2030

Southwest MN (Region 8)

Twin Cities Seven‐County Metro Area



In the Twin Cities, the 15 to 19 age group is forecast to grow by 15,878 people (+8.2%) between 2010 and 2020. The 20 to 24 cohort is expected to grow at a slightly slower pace, adding 13,281 people (+7.0%).

High School Graduation Trends Table 9 shows recent and projected graduation numbers for public high school students in Minnesota from 2002 to 2020. This data is useful in forecasting possible increases in college enrollment because of the direct correlation in the number of high school graduates and enrollment trends. As of 2010, approximately 71% of all high school graduates attended a postsecondary institution the following fall. Roughly 51% attended a Minnesota institution and the remaining 20% attended institutions out of state. Data for the years 2002 through 2006 is from the United States Department of Education while data for 2007 through 2011 is from the Minnesota Department of Education. Projections are based on information from the Minneso‐ta Office of Higher Education which provides a forecast for public and private high school graduates. We apply the projected growth rate to the actual number of public high school graduates to arrive at the public high school graduate projections for the years 2012 to 2020.

While data prior to 2002 is not shown in the following table, the number of high school graduates in Minnesota increased by nearly 21% between 1993 and 2003.

Today's high school graduate numbers are in the midrange of recent historic levels. The years prior to 1993 were characterized by declining numbers of graduates, falling from 72,660 in 1978 to a low of 49,239 in 1992. Since 1992, the number of graduates statewide grew as children of the baby boom generation reached graduation age. Current Minnesota high school graduates are at the tail end of the age group known as the "echo boom," the children of baby boomers.

Over the past ten years, the number of public high school graduates in Minnesota has been hovering around 59,000 students, peaking in 2008 at 60,586. The number of graduates is has been slowly tapering off since 2008 and is projected to continue sliding through 2015 to 54,818 public high school graduates. The number is expected to hold steady at around 55,000 graduates for three years, before increasing modestly during the final three years of the decade. By 2020, the number of public high school graduates is expected to reach 56,399. Between 2010 and 2020, the number of high school graduates in Minnesota is ex‐pected to decline by ‐5.0%.

It is important to note that minority students will comprise a larger share of high school graduates in the future. The number of nonwhite graduates is projected to grow roughly 30% between 2010 and 2020 while the number of white graduates declines ‐12%. In 2010, it was estimated that nonwhite students represented 15.5% of all graduates in Minnesota. By 2020, this proportion is expected to increase to 21.4%.



Minnesota

HS Graduates

Percent

Change

2002 57,440 ‐‐

2003 59,432 3.5%

2004 59,096 ‐0.6%

2005 58,391 ‐1.2%

2006 58,898 0.9%

2007 59,749 1.4%

2008 60,586 1.4%

2009 59,388 ‐2.0%

2010 59,377 0.0%

2011 59,087 ‐0.5%

2012 58,350 ‐1.2%

2013 56,595 ‐3.0%

2014 55,866 ‐1.3%

2015 54,818 ‐1.9%

2016 55,087 0.5%

2017 54,794 ‐0.5%

2018 55,254 0.8%

2019 55,706 0.8%

2020 56,399 1.2%

Actual

Projected

Sources: MN Dept. of Education; US Dept. of

Education; MN Office of Higher Education;

Maxfield Research, Inc.

TABLE 9

PROJECTED HIGH SCHOOL GRADUATES

MINNESOTA

2002 to 2020

51,00052,00053,00054,00055,00056,00057,00058,00059,00060,00061,00062,000

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

MinnesotaPublic High School Graduates

Actual

Projected

RENTAL MARKET ANALYSIS


Introduction The following section of the report analyzes the current market conditions for general occupan‐cy rental housing in Worthington. Detailed information on individual rental developments in the community along with information on new rental developments planned or under con‐struction in the surrounding area is presented.

Rental Housing Market Maxfield Research Inc. compiled detailed information for apartment developments in Worthington. Information on these properties is presented in Table 10 and was obtained by contacting managers and owners for each of the properties. The rents shown represent quoted rents and have not been adjusted to reflect the inclusion or exclusion of utilities at this time. The following points summarize key observations for the inventory of traditional apartment units in the community.

In total, we obtained information for 18 apartment properties containing 509 units in Worthington. Some properties were unwilling to participate in the survey or we were not able to reach the property. Of the properties that we were able to survey, there were no vacant units available. The equilibrium vacancy rate for rental housing is considered to be 5.0% which allows for normal turnover and an adequate supply of alternatives for prospec‐tive renters. In essence, there appears to be a drastic shortage of available rental units in Worthington.

The majority of the rental units are located more than two miles from campus. Of the 509 total units, 376 units in 13 developments are located more than two miles from the MWCTC campus. Conversely, only 99 units in three developments are located less than one mile from campus.

Lenore Manor, Campus View Apartments, and Golf Park Apartments are the closest rental properties to campus. Lenore Manor is subsidized through Rural Development and only had one student living at the property at the time of the survey. There are several other Rural Development properties located further away from campus including Brittany Apartments, Castlewood Apartments, Nobles Square I & II, and Stately Manor. Students are not eligible to live at Rural Development properties unless they are married or have dependents and are not a dependent on their parent’s taxes. Due to this restriction, there are very few stu‐dents living in Rural Development properties.

Campus View Apartments is situated just north of the campus. The 39‐unit project is occupied by approximately 84 students (there are 104 rooms). Rent is based on a per per‐son fee of $280/month. This project was fully‐occupied at the time of the survey.



# of Miles to Parking No. of Total

Project Name/Location Students Campus Availability Units Vacant Type No. Vac. Min Max Min Max

Okabena Estates 0 3.5 Off‐St/Gar 24 0 1BR na 0 658 ‐ 707 $650 ‐ $650 $0.92 ‐ $0.99

2257 Nobles Street vacancy rate: 0.0% 2BR na 0 933 ‐ 1,054 $810 ‐ $865 $0.87 ‐ $0.82

Worthington, MN 3BR na 0 1,410 ‐ 1,410 $925 ‐ $925 $0.66 ‐ $0.66

Notes:

New Castle Townhomes 0 3.4 Garage 30 0 2BR na 0 1,334 ‐ 1,437 $520 ‐ $650 $0.45 ‐ $0.39

1702, 1723 Pauline Avenue vacancy rate: 0.0% 3BR na 0 1,334 ‐ 1,460 $610 ‐ $750 $0.46 ‐ $0.51

2218, 2232 Castlewood Drive 4BR na 0 1,599 ‐ 1,620 $680 ‐ $680 $0.43 ‐ $0.42

Worthington, MN

Notes:

Willow Court Townhomes 0 3.1 Garage 24 0 3BR 24 0 1,300 ‐ 1,300 $560 ‐ $560 $0.43 ‐ $0.43

1545‐1627 Darling Drive vacancy rate: 0.0%

Worthington, MN

Notes:

Viking Terrace Apartments 0 2.5 Off‐Street 60 0 1BR na 0 650 ‐ 650 $331 ‐ $391 $0.60 ‐ $0.51

1440 North Burlington vacancy rate: 0.0% 2BR na 0 780 ‐ 780 $381 ‐ $464 $0.49 ‐ $0.59

Worthington, MN 3BR na 0 940 ‐ 940 $440 ‐ $517 $0.47 ‐ $0.55

Notes:

Brittany Apartments 4 3.0 Off‐street 24 0 1BR 10 0 500 ‐ 500 $478 ‐ $600

1505, 1515 Darling Drive vacancy rate: 0.0% 2BR 14 0 850 ‐ 850 $517 ‐ $718

Worthington, MN

Notes:

CONTINUED

Section 42. Income restricted. Two‐story townhome units with attached garages. Central A/C, refridgerator, stove, W/D hookups.

Playground.

Section 42. Income restricted. Students are eligible if married or have dependents. Four units reserved for 30% AMI, 47 units at 50%, and 9

units are market rate. Section 8 vouchers used for market rate units. Renovated in 2007. Geo thermal heating/cooling system. Heat,

garbage, water, and sewer included in rent. Picnic shelter, tot lot, community laundry.Wating list with about 65 names.

Rent/sq. ft.

Heat, water, and trash included in rent. Wall A/C, electric fireplace, balcony, dishwasher, stove, refridgerator. Community laundry, patio.

Section 42. Income restricted. Opened in 2011. Two‐story townhomes with attached garages. Water, sewer, and garbage included in rent.

Central A/C, in‐unit W/D, dishwasher, microwave, patio. Playground and rain gardens.

$0.96

$0.61

Size

TABLE 10

RENTAL HOUSING PROJECTS

WORTHINGTON

October 2012

Monthly RentUnit Description

Rural Development. Students must be independent from parents tax return to qualify or have dependents. Must be 26 or older if tenant

does not have dependents. Rent includes heat, water, sewer, and trash. Rental assistance is available for 21 units. Average rent paid =

$303/month. Building features coin laundry and off‐street parking.





Castlewood Apartments 4 3.5 Off‐street 24 0 1BR 10 0 500 ‐ 500 $478 ‐ $595 $1.19 ‐ $0.96

2169, 2205 Cecilee Street vacancy rate: 0.0% 2BR 14 0 850 ‐ 850 $557 ‐ $713 $0.66 ‐ $0.84

Worthington, MN

Notes:

Nobles Square I & II 4 3.5 Off‐street 48 0 1BR 8 0 500 ‐ 500 $445 ‐ $515 $1.03 ‐ $0.89

2175, 2195 Nobles Street vacancy rate: 0.0% 2BR 32 0 850 ‐ 850 $495 ‐ $545 $0.58 ‐ $0.64

Worthington, MN 3BR 8 0 950 ‐ 950 $535 ‐ $575 $0.56 ‐ $0.61

Notes:

Stately Manor 4 2.9 Off‐street 24 0 1BR 10 0 500 ‐ 500 $449 ‐ $529 $1.06 ‐ $0.90

1525, 1545 Darling Drive vacancy rate: 0.0% 2BR 14 0 850 ‐ 850 $519 ‐ $629 $0.61 ‐ $0.74

Worthington, MN

Notes:

Lenore Manor 1 0.1 Off‐street 12 0 1BR 5 0 $469 ‐ $469

808 Thompson Avenue vacancy rate: 0.0% 2BR 7 0 $517 ‐ $517

Worthington, MN

Notes:

WORTHINGTON


TABLE 10

CONTINUED

Unit Description Monthly Rent Rent/sq. ft.

Size

October 2012

na

na

na

na


does not have dependents. Rent includes heat, water, sewer, and trash. Average rent paid = $283. Rental assistance available for 19

units. Building features coin laundry and off‐street parking.


does not have dependents. Rent includes heat, water, sewer, and trash. Rental assistance is available for 19 units. Average rent paid =

$265/month. Building features coin laundry and off‐street parking.


does not have dependents. Residents pay heat and electric. Avgerage rent paid = $294/month for Nobles Square I and $227 for Nobles

Square II. Rental assistance is available for 32 units. Building features coin laundry, off‐street parking.

Rural Development. Rental Assistance available for 7 units. Building features coin laundry and off‐street parking.Utility allow of $39 for

one‐bedroom units and $59 for two‐bedroom units.





Johnson Apartments 0 1.9 Off‐street 10 0 1BR 3 0 $450 ‐ $450

702 10th Street vacancy rate: 0.0% 2BR 7 0 $575 ‐ $600

Worthington, MN

Notes:

Country Village Apartments 1 2.4 Off‐street 24 0 1BR 2 0 810 ‐ 810 $490 ‐ $490 $0.60 ‐ $0.60

1450 Knollwood Drive vacancy rate: 0.0% 2BR 22 0 1,000 ‐ 1,000 $540 ‐ $540 $0.54 ‐ $0.54

Worthington, MN

Notes:

Campus View Apartments 84 0.1 Off‐Street 39 0 EFF 9 0

1535 Collegeway Drive vacancy rate: 0.0% 1BR 9 0

Worthington, MN 4BR 21 0

Notes:

Inn Towne Apartments 0 1.8 Off‐street 24 0 1BR 8 0 $420 ‐ $440

802 10th Street vacancy rate: 0.0% 2BR 16 0 $520 ‐ $540

Worthington, MN

Notes:

Golf Park Apartments 75%‐80% 0.1 Off‐street 48 1BR 18 na

1550, 1552 College Way vacancy rate: na 2BR 30 na

Worthington, MN

Notes:

Size

CONTINUED


WORTHINGTON

October 2012


TABLE 10

na na na

na na na

na

na

na

na

na

$280 per person

$280 per person

$280 per person

na

na

Rent includes heat. Building features extra storage, coin‐op laundry, picnic area, & off‐street parking.

Tenants pay electric (heat is electric). Water, sewer, trash is included. Units feature balconies, stove, refridgerator.

Tenants pay electric. Refridgerator and stove. Off‐street parking included. Johnson Eye clinic on first floor.

Three buildings. Residents pay for electric and heat. Off‐street parking available for $50/year.

na

na

na

Could not reach property for monthly rents and vacancies.

na

na

na

na





Thompson Apartments na 2.1 Off‐Street 39 EFF 8 na

1009 3rd Avenue vacancy rate: na 1BR 23 na

Worthington, MN 2BR 8 na

Notes:

Prairie Village I & II na 2.4 Garage 24 1BR 2 na

1527 Clary Street vacancy rate: na 2BR 22 na

939 McMillan Street

Worthington, MN

Notes:

Country Manor 2.9 24

1424 1st Avenue SW

Worthington, MN

Notes:

Lakeview Apartments 0 2.1 7 0

302 Lake Street vacancy rate: 0.0%

Worthington, MN

Notes:

509 0 0.0% vacant

Note: Miles to campus based on driving distance

Source: Maxfield Research Inc.

TABLE 10


WORTHINGTON

na

na na na

October 2012


Size

Total

Property was unwiling to participate in the survey.

Converted Downtown hotel. Residents pay heat. Building features security entry, elevator, extra storage, coin‐op laundry, and some off‐

street parking. Could not reach property for monthly rents and vacancies.

Property was only willing to provide vacancy rate and number of students currently living at property. They were unwiling to provide unit

mix and monthly rents.

Rent includes detached garage and all utilities except electric. Units feature balconies on second floor. Could not reach property for

monthly rents and vacancies.

na

na

na

na

na

na

na

na

na

na na



We were unable to reach Golf Park Apartments. However, based on our student focus groups, approximately 75% to 80% of the residents are students.

New Castle Townhomes, Willow Court Townhomes, and Viking Terrace Apartments are low‐income housing tax credit properties serving households at 60% of area median income. Students are not eligible to live at these properties unless they are married or have de‐pendents and are not a dependent on their parent’s taxes. Due to this restriction, there are no students living at any of the tax credit properties.

Excluding the tax‐credit properties, over 45% of the units are two‐bedroom units while 44% are one‐bedroom units, 5% are four‐bedroom units, 4% are studio/efficiency units, and 1.9% are three‐bedroom units.

The average rental rate across all properties is $491 per month with a range of $280 for an efficiency unit at Campus View Apartments to a high of $925 for a three‐bedroom unit at Okabena Estates. One‐bedroom units have an average rent of $485 per month, two‐bedrooms average $595, and three‐bedrooms average $555.

The average rent per square foot by unit type is as follows: – One‐bedroom units are $0.86 per square foot; – Two‐bedroom units are $0.67 per square foot; and – Three‐bedroom units are $0.58 per square foot.

Unit size information was only available for approximately half of the apartment properties surveyed. Based on the information available, the average one‐bedroom unit is 562 square feet. Two‐bedroom units average 885 square feet in size while three‐bedroom units aver‐age 950 square feet.

Total

Units

Vacant

Units

Vacancy

Rate

Average

Size

Average

Rent

Average

Rent/SF

Studio/Efficiency 17 0 0.0% NA NA NA

1‐Bedroom 180 0 0.0% 562 $485 $0.86

2‐Bedroom 186 0 0.0% 885 $595 $0.67

3‐Bedroom 8 0 0.0% 950 $555 $0.58

4‐Bedroom 21 0 0.0% NA NA NA

Total 412 0 0.0% 664 $491 $0.74

* excludes tax‐credit properties

Source: Maxfield Research, Inc.

TABLE 11

EXISTING RENTAL PROJECTS UNIT MIX*

WORTHINGTON

October 2012



Utilities are often handled differently between projects. Over 50% of the properties include heat in the monthly rent. The majority of the properties include off‐street parking. The tax‐credit properties have attached garages.

The majority of the properties in Worthington have basic features and amenities including:

– Kitchens with refrigerator, sink and stove – On‐site laundry facilities – Wall‐unit air conditioners – Off‐street parking

The Worthington Area Chamber of Commerce maintains an apartment list that is updated annually. Staff in the Admissions Office will hand out this brochure to students looking for housing. The Admissions Office also keeps a separate list for people calling to advertise their home for rent. The College will only post the rentals and does not inspect or screen any of the housing on the list, nor does the college arrange roommates.

Students seeking housing will typically initiate their search around May. The Admissions Office indicated if students wait until summer to start their search, all of the apartments are usually taken for the upcoming fall semester

Pending Rental Developments Maxfield Research interviewed planning staff in Worthington to identify any new rental devel‐opments that are proposed, planned or under construction in the city. The Worthington HRA is planning to develop a 36‐unit market rate rental property at the corner of East Avenue and County Road 5. They are currently preparing site and design plans. Antici‐pated construction start is sometime in 2013.



Competitive Rental Communities

FOCUS GROUP SUMMARY


Introduction Maxfield Research Inc. conducted three focus group sessions with students and staff at Minne‐sota West Community and Technical College (MnWest) on Wednesday, November 29, 2012. The impetus of these focus groups was to learn more about student housing needs and related issues such as availability, costs, locations, market conditions, desired features and amenities, among other characteristics. MnWest staff included personnel from admissions, administration, accounting, IT, and athletic coaches. Student focus groups were organized into the following three sessions: first‐year students, second‐year students, and student‐athletes. However, all three sessions had some students who did not meet the targeted student demographic but still participated. Focus group questions are located in the Appendix of the report. Number of Students All three focus groups were very well attended. Typically, most student focus groups are targeted to a group of 8 to 12 students to ensure all students are heard and able to participate. The MnWest focus groups attracted 17 students (Session #1) to 30 students (Session #3), indicating students are very interested in discussing housing needs. Place of Origin Students who attended the focus groups previously resided in locations throughout the coun‐try. The following list identifies student geography’s prior to relocating to Worthington. (Note: not all students shared their place of origin) Session #1

Worthington (4)

St. James

Trimont

Breckenridge

Slayton

Fulda

Round Lake

Yankton, SD

Chamberlain, SD

Omaha, NE

Freemont, NE

Sanford, FL

Rapid City, SD

Alta, Iowa Session #2

Heron Lake

Fairmont

Okobena

Florence, MS

Sioux Valley

Wilmont

Lamberton

Sioux Falls, SD

Biglo

Omaha, NE

FOCUS GROUP SUMMARY


Sanford, FL

Minneapolis (2)

Lake Park, IA

Rapid City, SD (2)

Worthington

Detroit, MI

Fort Lauderdale, FL

Phoenix, AZ

Session #3

Fulda (3)

Trimont

Mitchell, SD

South Carolina

Round Lake (2)

Luverne

Heron Lake

Lincoln, NE

Prior Lake

Custer, SD

Mobile, AL (2)

Missouri

Racine, WI

Miami, FL

Florida

Baltimore, MD

Palm Beach, FL

Blue Earth

Brewster

Edgertown, WI

Michigan

Lake Park, FL The following are the key points from each question that was brought forth during the focus group sessions.

Why Choose MnWest? Students were asked the primary reasons they chose to attend MnWest. For many students, the top reasons were proximity to their parent’s home and the lower cost to attend MnWest versus four‐year colleges and universities. Other reasons included specific program offerings and a good reputation. For the student‐athletes, attending MnWest was a last option for many of the out‐of‐state athletes who want to play a particular sport with hopes of moving‐on to the next level after graduating from MnWest. Most athletes expressed their frustration with housing availability and the lack of options.

Finding Housing The vast majority of focus group participants found it difficult to find housing in Worthington. As presented in the Rental Market Analysis Section, the overall rental housing market is strong in Worthington and there is high demand from local employees, resulting in a competitive environment for obtaining rental housing for students.

FOCUS GROUP SUMMARY


Most students did not begin the housing process until the summer before fall semester. Many students mentioned they began searching for housing in June or July. Although most students were able to secure a place to reside in a short‐time frame, not all students had a place to live once fall classes began and other students had to take what was available; although it did not necessarily meet their criteria. Athletes who were recruited from outside the area experienced significant difficulties when trying to secure housing. Because many of the athletes committed to MnWest late the summer, the availability of housing was even scarcer. Students identified a variety of resources they utilized when searching for housing. The majori‐ty of students found housing on their own without the assistance from MnWest. Although MnWest maintains a listing of apartment units for rent, many students used other means to find housing. Common measures included referrals from other students, local newspaper, area Realtors, and coaches. Because very few apartment communities have websites, very few students found their housing online. Athletic coaches play a key role in assisting student‐athletes, especially those athletes who commit to MnWest in late summer before the beginning of fall semester. Athletic coaches trying to recruit students indicated they have worked with many students in trying to secure housing for their athletes, sometimes successfully and sometimes unsuccessfully. All the coaches in attendance stated the lack of student housing has negatively restricted their ability to recruit athletes. Some students commented on housing discrimination by local landlords who are reluctant to rent to students. Because of the tight rental housing market in Worthington, landlords have been “selective” and have preferred to rent to non‐students in many circumstances. Minority students have also experienced housing difficulties because of housing discrimination.

Current City Residence The majority of students who attended the focus groups live in Worthington. The number of student who commuted varied by session, but on average about 25% to 30% lived outside Worthington and commuted from other communities in southwestern Minnesota or Northern Iowa. Most of the drive times were under 30 minutes, although a few students commuted from up to 45 miles away.

Housing Type The majority of students are currently living in traditional multifamily apartment style housing. About 20% of students reside in single‐family homes, either rented with roommates or residing with family. Due to the lack of townhomes available in Worthington, no focus group attendees resided in a townhome‐style unit. A few students mentioned residing in a hotel (Travelodge

FOCUS GROUP SUMMARY


Hotel) for a short time while they were looking for a rental unit. One of the focus group at‐tendees still did not have a place to reside three months into the school year. This student was sleeping on a teammate’s couch as he continues to search for a place to live. A very small percentage of students live alone, commonly due to the high cost. Roommate situations are most common and are preferred since the costs can be spread among multiple students. Finally, a portion of students live at home with their parents and commute to campus daily.

Positive Features of Current Housing Situation When queried about the features and amenities students liked about their current living situation, few students had many positive things to say. However, students commented that many apartment complexes had ample parking for car owners and the overall housing costs are less if they went to a larger city or university. Also, most students liked having roommates to help bring housing costs down.

Negative Features of Current Housing Situation Students were asked about the features they dislike about their current living situation. The following bullet points summarize key issues:

Security deposit

Lack of amenities

Lack of maintenance

Property managers

Laundry management

Mix of residents

Price

Inability to take Section 8

Too many roommates

Lack of bathrooms

Unfurnished units

Lack of food options or food stamps

Inadequate heating and cooling

Rodents

Odor

Older units and not up‐kept

FOCUS GROUP SUMMARY


Housing Costs and Lease Terms Students were asked to provide their monthly housing costs they pay in rent. If they pay utilities separately, they were also asked to identify the approximate amount that they pay in addition to their monthly base rent. In addition, students were asked about their lease terms and deposit requirements. Most of the quoted rents assume shared costs with at least one roommate. The following summarizes responses from focus group attendees:

The majority of students sign 9‐month lease terms and leave Worthington after the end of second semester. Only a small percentage of students sign a 12‐month lease.

A small minority of students pay less than $200 per month for housing costs. These stu‐dents are in large roommate situations where the rent is reduced due to the sheer number of students in the unit. However, some of these students may be sleeping on a couch or in a shared bedroom situation.

Most of the rental projects include heat, garbage, and common area maintenance. As a result students are responsible for electricity, cable, phone, and internet.

About 20% to 25% students stated they pay between $250 and $300 per month. The majority of students pay between $300 and $350 per month.

Very few students pay more than $400 per month, although a few students did pay $500 per month for a one‐bedroom unit.

Housing Features and Amenities Students were asked about their ideal living situation and the types of features and amenities that would be desirable to them in a new student housing development. Although students from the focus groups have preferences for features and amenities, the overwhelming majority stated they would be happy with a clean, decent place to live that was professionally managed. The students do not desire all the “bells and whistles,” but rather a safe and comfortable place to reside. Students are price sensitive and they would trade amenities for a reasonably priced housing unit. The following list summaries amenities and comments from the students based on must have’s and optional: Must Have’s

Air‐conditioning

Cable ready

Wi‐Fi

Dishwasher

Multiple Bathrooms

Larger rooms

Desk

Fully furnished

Common area Washer/Dryer

Computer room

FOCUS GROUP SUMMARY


Utilities in rent

Better appliances

Surface parking

Optional

Garages

Fitness facilities

Big screen TV community room

Community space

Food availability

Pool table

In‐unit washer/dryer

Pool

Shuttle service

General Comments

Most students prefer unit types appealing to roommates household types. Most students prefer a total of two to three roommates per unit.

Although students prefer a roommate household type, students want to have their own bedroom that has a separate lock for privacy.

Food service was an issue for many students. Although students want their own kitchen in the unit, many students want the option to purchase additional meals from a cafeteria with extended hours. The students voiced frustration because the current cafeteria does not take credit/debit cards, food stamps, and has no ATM. In addition, the cafeteria is open lim‐ited hours.

Location of a new apartment complex is critical. Students desire the apartment to be located as close as possible to the campus. Most students preferred the location to be on campus grounds versus off‐campus.

Although not every student has a car, parking availability was very important. Garage parking is preferred, but most students are content with dedicated surface parking with plug‐ins for the winter months.

A common laundry room is a must for a rental building. The students desire multiple “working” washer and dryers. Though an in‐unit washer/dryer is preferred by some stu‐dents, most students would be happy with a common room laundry facility that was well‐maintained.

Students prefer bundling their utilities into the monthly rent. Many students also expressed having basic cable TV incorporated into the monthly rent. Internet and Wi‐Fi were de‐manded by students as must have’s throughout the building. Students prefer Wi‐Fi access throughout the whole building.

FOCUS GROUP SUMMARY


Financial aid distribution was another issue for many students. Financial aid is not distrib‐uted until after the semester begins so students do not have access to funds to pay the first month’s rent or security deposit. According to the focus group attendees, most apartments want the first month’s rent plus a $500 deposit in advance. Most students do not have the funds to cover this expense without financial aid.

Secured access to the building is also a priority with students. Many buildings in Worthing‐ton lack building security and students would like better secured access to the building.

Students desire a central community lounge that could be multifunctional for socializing or studying. A big screen TV was mentioned by multiple students.

Focus group students prefer increased bathrooms. At a minimum, most students would be happy with two bathrooms for multiple roommate household types.

Furnished units are also preferred by many students. Many students desire basic living room furniture, a desk for studying, and beds.

Students prefer the 9‐month lease that follows the school calendar. However, they would also prefer flexible lease options that could allow for adjustments after the fall semester.

Students also prefer the idea of a MnWest managed building versus a third party property management company that is unaffiliated with the college.

Top Priorities The top five priorities indicated by students in the focus group regarding desired amenities were as follows:

Sufficient number of units to accommodate those that want to live in new student hous‐ing on or near campus;

Basic, clean‐unit that is reasonably priced;

Furnished units;

Larger size units (sufficient to accommodate multiple people in the unit); and

Availability of meal plan.

FOCUS GROUP SUMMARY


What Students are Willing to Pay for Rent? Students were asked what they were willing to pay for rent if their desired features were available in a new housing development. The following bullet points summarize key findings.

When probed, about 85% of the students said they would move into new student housing if it met their housing needs and was reasonably priced.

Most students agreed they would pay a premium of up to $100 per month for new housing near campus.

Student preferences as to what they would be willing to pay ranged in price from an aver‐age of $350 per month to $450 per month. Students said they would not pay more than $500 per month. They would pay a little more to have basic cable and internet included in the monthly fee.

Most students prefer to live with roommates to keep costs more affordable.

Summary Overall, students are frustrated by the lack and condition of housing in Worthington that would target students. The Worthington rental market is highly competitive and some landlords are reluctant to rent to students. Many students are unable to find housing that meets their needs and are forced to live in subpar conditions until something becomes available. The lack of housing has also affected the ability to recruit for some academic and athletic programs. Many coaches commented that they have lost recruits due to the lack of housing for student athletes. While students desire certain features in the housing, most just want a clean, decent place to live that will be priced at a reasonable amount and will provide them with basic features such as dedicated surface parking with plug‐ins, air conditioning, laundry, private bedroom, one bathroom for two people, internet and basic cable TV. Additional features are desired, but not necessarily required. The most important thing is a safe place to live that is reasonably priced and close to campus. Most students prefer a roommate situation in order to keep rents affordable. Very few stu‐dents preferred a one‐bedroom unit due to the added expense. Students are conscious of the money they pay for rent and what they expect to receive for their rent dollars. Students would be willing to pay a price premium of about $100 per month for new housing. Based on the focus group sessions, it appears most students would be willing to pay between $350 to $500 per month if the rent included utilities, basic cable, and internet. Many students

FOCUS GROUP SUMMARY


are paying more than $400 per month if all housing costs are combined and added together. Students stressed that anything more than $500 per student would be too expensive. Students are also very concerned about receiving financial aid after the start of the semester once monthly rent and the security deposit is due. Most students do not have the funds to cover this expense without the financial aid check. Finally, students desired the availability of extended cafeteria hours that would offer food service for additional meals. Many students would like the option of a meal plan.

DEMAND ANALYSIS


Introduction This section of the report calculates demand for student rental housing in Worthington, Minne‐sota. Factors considered include projected changes in the number of students graduating from high school in Minnesota, current and projected MWCTC enrollment, the geographic origin of the full‐time student population, and the supply of rental properties in Worthington.

Demand Calculations The first step in calculating demand for student housing is to project changes in enrollment during the forecast period, starting with the fall 2012 enrollment figures for new and returning students provided by MnSCU (431 full‐time students). According to existing enrollment projec‐tions obtained from the Finance Division section of MnSCU’s website, total enrollment (full‐time equivalent) at Minnesota West Community and Technical College is expected to decrease ‐1.6% from 2012 to 2013, then hold steady between 2013 and 2015 before increasing in 2016. We applied the ‐1.6% loss to the current enrollment for the Worthington campus to arrive at a projected total enrollment of 425 full‐time students for 2013. It is anticipated that total en‐rollment will then hold steady through 2015. To forecast new student enrollment, we examine high school graduation trends and the per‐centage of high school graduates that have historically enrolled at the MWCTC campus. MWCTC captured approximately 0.31% of the estimated high school graduates statewide from the 2011‐2012 school year. We apply this capture rate to the projected number of high school graduates from 2013 through 2020 to arrive at a forecast of new students enrolling at MWCTC by year. In addition to high school students from Minnesota, MWCTC attracts students from other states. Based on historical data from fall 2012, approximately 89% of the MWCTC student body is from Minnesota and 11% is from other states. Therefore, we increase the projected new student enrollment by 11% for each year. Because the number of high school graduates in Minnesota is expected to decline through 2017, applying the aforementioned formula results in a slight decline in the number of new students enrolling at MWCTC from 200 in 2012 to 189 in 2015/2017. The projected increase in the number of Minnesota high school graduates from 2017 to 2020 will generate growth in the number of new students enrolling at the MWCTC campus. The number of new students is expected to grow slightly to 190 in 2018, 192 in 2019, and 194 in 2020.

DEMAND ANALYSIS


High School Graduates in Minnesota

% MWCTC Students from Minnesota1 x

% MN HS Graduates Enrolling at MWCTC2 xNew MWCTC Students from MN =New MWCTC Students from Outside MN +

New Students =Returning Students +Total Students =

% Students from within Commute Distance3 x# Number of students within Commute Distance

% of local students seeking housing in Worthington4 x% of local studens requiring local housing =

% of Students outside commuting distance x

Total Requiring Housing =

# of Rental Bedrooms in Worthington5

% of Bedrooms occupied by Students x# of Students in Existing Rentals =

Pent‐up Demand for Student Housing6

Notes:1 2012 based on actual geographic origin data; 2013‐2020 projections based on an average of historical geographic origin data from 2009 to 20122 Based on historical average capture rate3 Determined that student is within commute distance if their County of origin is within a 45‐minute drive time from the campus

5 Excludes tax credit projects with income guidelines6 Pent‐up demand based on the number of students requiring local housing minus the estimated number rental bedrooms occupied by students

Source: Maxfield Research Inc.

135

111

20%135

106

20%135

106

128

101

20%128

98

20%135

244

91

20%135

91

20%135

106

67720%135

108

Existing and Pending Supply of Rental Bedrooms in Worthington

641 641 677 677 677 677 67720%

67720%

204 206 208

230 226 226 226 242 242 242

194 191 191 191 204 204

246

431 425 425 425 454 454 454 458 462231 230 233 236 264 265 264 266 268

11% 11% 11%

200 195 192 189 190 189 190

11% 11% 11% 11% 11% 11%

192 194

179 174 171 168 169 168 169 171 1730.31% 0.31% 0.31% 0.31% 0.31% 0.31% 0.31% 0.31% 0.31%

56,399

89% 89% 89% 89% 89% 89% 89% 89% 89%

55% 55%

TABLE 12PROJECTED DEMAND FOR NEW RENTAL UNITS

MWCTC, WORTHINGTON2012‐2020

2012 2013 2014 2015 2016 2017 2018 2019 2020

Projected Full‐Time Enrollment

58,350 56,595 55,866 54,818 55,087 54,794 55,254 55,706

234 249 250 25055% 55% 55% 55% 55% 55% 55%

4 Pct. Of students residing within the 45‐minute commuting distance who desire to live in Worthington and students who are unable to find housing in Worthington due to lack of

supply.

252 254

15%35

15%35

15%35

15%37

15%37

15%37

15%38

15%38

15%36

237 234 234

DEMAND ANALYSIS


Because not all students are graduating in two years and some students leave before graduat‐ing, the number of returning students does not equal the number of new students from the previous year. Since 2000, the number of returning students has exceeded the prior year’s new student enrollment by an average of 40%. We factor this trend into our projections for the number of returning students for each year. Combining the projections for new students plus returning students results in the full‐time student enrollment forecast for the MWCTC. Total full‐time enrollment is expected to remain at 425 between 2013 and 2015 and then increase to 454 between 2016 and 2018 and increase to 462 by 2020. The geographic origin data for students enrolled in fall 2012 indicates that roughly 55% of the student body originates from an area that is within a 45‐minute drive from campus. We utilize the 45‐minute timeline as an appropriate distance threshold for students being able to live at home and commute to campus versus requiring local housing. Because 55% of the student body lives within 45 minutes, we reduce the number of students requiring local housing. However, a portion of students within the 45‐minute commuting distance will still desire to live in Worthington. Additionally, there is pent‐up demand for apartment units as some students have been unable to find adequate housing. Together with the 194 students who live outside the commuting distance, demand rises to 230 students in 2012. Our survey of existing rental properties in Worthington indicates that there are approximately 640 rental bedrooms in the City, excluding tax credit projects with income guidelines. This does not include non‐traditional rental projects, such as bedrooms or basements offered for rent in single‐family homes. According to feedback from area apartment leasing agents, property managers, and owners it appears that roughly 20% of these bedrooms are occupied by stu‐dents. Assuming that there is one student per bedroom, this equates to a total of 128 students residing in the existing inventory of rental housing. This proportion will change from one year to the next based on market conditions but we use this average Subtracting the estimated number of students in rental housing from the projected number of students requiring local housing results in a calculation for pent‐up student housing demand. In 2012, we estimate that there is excess demand for 101 bedrooms. In 2013, there is expected to be pent‐up demand for 98 bedrooms, due to a slight decline in enrollment. Due to the addition of the pending 36‐unit property developed by the Worthington HRA, pent‐up demand is pro‐jected to decrease to 91 bedrooms in 2014 and 2015. Pent‐up demand is expected to climb to a range of 111 bedrooms by 2020.

CONCLUSIONS & RECOMMENDATIONS


Introduction The Conclusions and Recommendations section of this report includes: a general overview of student housing industry trends in Minnesota and across the nation; a summary of various student housing public/private partnership arrangements; and, recommendations for unit mix, sizes, and rents along with suggestions for unit features and common area amenities.

Student Housing Industry Trends Although the real estate industry has been slow to recover through the economic downturn, the student housing industry is seen as one of the few bright spots in the commercial real estate industry. Often overlooked by developers and investors, the student housing market is somewhat “recession proof’ from the economy at large. Capital markets are bullish on the student housing industry due to continued enrollment gains and rent growth. Nationally, the number of full‐time college students has grown steadily over the past 15 years and enrollment is expected to continue to increase through at least 2017. A recent study conducted by the National Student Housing Council (NSHC) analyzed enrollment trends at universities across the country to see if the economic downturn had caused a de‐crease in enrollment. The recession and increased unemployment drove up enrollment at most private and public universities when comparing fall 2008 to fall 2010 applications and freshman enrollment. Coupled with today’s competitive job environment, most people find a college education essential for success in today’s economy. Strong demographics, fueled by the Echo Boom/Millennial generation (roughly 78 million people), continue to drive college enrollment. Consequently, this generation of college stu‐dents has different expectations for their student housing than their baby‐boomer parents generation. Most residence halls were constructed in the 1950s and 1960s as double‐loaded corridors with gang‐style common bathrooms. Typically each room was approximately 200 square feet. Although this design was adequate at the time it was designed and constructed, today’s students have a much different perspective on the amount of space and privacy they find acceptable. The Millenials are generally technology‐savvy, have involved parents, grew‐up with fewer siblings than previous generations, and are visually stimulated. They are also “value focused”, will not settle, and are also concerned about sustainability of facilities. What was once consid‐ered luxury in student housing – kitchens, private bathrooms, private bedrooms, social spaces, and lounges are now expected. Suite style and apartment style has become the new norm over the past decade. University Business identified these top six trends in campus housing: luxury, privacy, privatization, live and learn, safety and security, and go green.



Internet connectively, including wireless, is a necessity for students. To keep up with the competition of the off‐campus market, new properties need a base level of amenities and a point of differentiation from the competition. The common area amenities students want today are fitness facilities, cyber café or lounge with coffee bar and WIFI, study group spaces for collaboration, grilling areas, billiards, video gaming stations, and entertainment/theatre space. Larger developments with land availability also offer a pool, clubhouse, outdoor sport court or other green space, and even indoor golf stimulators. According to the College Board, the average high school senior applies to twenty of more colleges today. Therefore, campus facilities and specifically housing is a marketing tool univer‐sities can utilize to differentiate themselves from the competition. Maxfield Research Inc. has completed student housing needs assessments for small and large colleges and universities across Minnesota and throughout the country for private developers developing student housing adjacent to or near these facilities. Overall, our findings identify the following student preferences, irrespective of the location of the campus.

Many campuses in Minnesota and across the country are significantly renovating and/or constructing student housing that offers students more contemporary features and ameni‐ties than the traditional dormitory‐style residence. These new buildings often provide apartment‐style units that accommodate multiple students in one unit, but with each hav‐ing a private bedroom. These new buildings have been very popular with students despite an often significantly higher price tag to reside in these units.

Surveys of students at these campuses frequently document the same issues about more privacy and freedom and a desire for new and modern features. Although initially, there may be a concern with price‐sensitivity, Maxfield’s experience has been that once the hous‐ing is available, students are willing to pay the extra fees to obtain the modern features.

Students across the State and in other areas of the Country frequently mention the follow‐ing preferences regarding their housing:

– A desire for more privacy; – A desire to choose the people they live with; – A preference for the latest technologies including Internet and wireless access; – A preference for purchasing and preparing their own food. – A preference for fewer roommates overall; and, – A preference for living in close proximity to the campus with convenient access

to campus facilities and activities.

With rising education costs, some price‐sensitivity has emerged among students. However, students’ desire and preference for modern features and conveniences in their housing has overridden price‐sensitivity to some degree.



New student properties have been developed recently at St. Cloud State University, Winona State University, Itasca Community College, Minnesota State University, Hamline University and the University of Minnesota. In nearly every case, these new properties are charging rents above what is available in the nearby off‐campus rental market. However, students are paying the higher fees and these properties are staying full.

Among student surveys, common responses have surfaced. In the survey, students identi‐fied a number of features as highly desirable. These items were given slightly different rankings by on‐campus and off‐campus students. However, the differences typically re‐flected the availability of these items in their current housing situation. For example, on‐campus students indicated a greater desire for a common area space for socializing with friends that reflects less privacy in on‐campus residence halls versus off‐campus private apartments. They are listed below in their order of preference.

– In‐Unit Washer/dryers – Access to the University Computer (Ethernet) – Internet Access – Security Systems – Full Appliance Package – Computer Room – Parking – Air‐Conditioning – Common Area for Socializing with Friends – Recreational Space

Public/Private Student Housing Partnership Overview On most college and university campus, providing housing for students is a fundamental component of the institutions mission of educating students. Student housing has evolved from facilities necessary to house students to learning communities designed to promote intellectual growth while enhancing the campus community. Together with increased enroll‐ments and changes in student desires, many colleges and universities have fallen behind on their ability to accommodate growth. Decreased endowments and sharp declines in state funding have resulted in budget cutbacks and reductions in capital spending across college campuses, at a time when many institutions have seen increased demand. Today, more than ever, college and university leaders are exploring public/private partnerships as a means of financing new on‐ and off‐campus housing facilities. These partnerships recog‐nize that while student housing plays an important role on campus, it is not necessarily always one of the institution’s core competencies. Public/private partnerships can offer advantages that are mutually beneficial to all parties.



For developers, the arrangement can result in mitigating project‐related risk and access to site locations that would not be available otherwise. For colleges and universities, the partnerships can substantially reduce a project’s debt capacity while providing the latest trends in student housing design that meet today’s student housing needs. Finally, the timeframe to develop a housing project is expedited; most university initiatives can take up to five years until occupan‐cy, whereas public/private partnerships can be streamlined in as little as two years. Through the partnership, the school is able expand and attract more students with its housing options. Modern facilities are a draw and demanded by today’s students who have become more sophisticated and seek more amenities. The development of state‐of‐the‐art housing allows the university to upgrade its living options for current students while at the same time attracting new students. The roles of a public/private partnership can vary greatly for each party involved. Typically, the size, scope, and experience of the institution’s staff will dictate the depth of involvement for both parties in the partnership. The following describes various types of public‐private partner‐ships that have been implemented at other colleges and universities across the country. Referral A college or university agrees to direct students to a third‐party partner’s property in exchange for concessions such as discounted rents or payment of a nominal fee. Some of these agree‐ments may result in the developer’s property operating more like an on‐campus housing facility, such as more student‐friendly leasing policies. The referral model requires the developer to be responsible for all aspects of financing, con‐struction, and operating the project. The developer’s level of risk and control are high in this scenario, while the institution has little risk. However, while the school can seek partners to deliver and operate the housing, the school cannot privatize its relationship with students. Therefore, it may be difficult for students and their parents to differentiate between institution‐owned housing and third‐party‐owned affiliated housing. Affiliation A more formal arrangement where the college or university directs students to the third‐party partner’s property as if it were part of its own campus inventory while having some control of the operations (i.e. resident advisors, residential policies, etc.). In many cases the land may be leased to the third‐party by the institution and/or the institution may offer some guarantees. The university maintains fee ownership of the land, with the typical ground lease arrangement structured for at least 50 years. A variation of the ground‐lease is the ground‐lease plus a master lease; where the university extends a financial commitment to lease units within the project regardless of student demand.



Under the affiliation model, there are more options to transfer some risk between the school and its private development partner(s). The institution may provide security, management, or technology services at minimal or no cost in return for greater control of operations. An affiliation could be simply structured as a requirement to adhere to certain residential policies, or strongly structured as a master‐lease agreement for the institution to control and operate the project or components of the project. Structured/Foundation‐Owned Project A not‐for‐profit entity issues tax‐exempt debt to finance the project and its board controls all facets of delivery and operations. Typically the land is leased to the not‐for‐profit by the institution (501c3) and/or the institution may offer some guarantees. The structured model transfers all risk to the not‐for‐profit foundation, resulting in the institu‐tion ceding control to the foundation’s board, on which the developer and institution could sit and retain some authority. However, this model limits the financial return to the foundation and its not‐for‐profit beneficiaries – typically the institution. The developer receives a fee for services (i.e. architect, managing construction, delivering the project, etc.) and carries little risk and the developer is not required to bring equity to the project. Joint Ownership Under this partnership, the developer and the university share some of the risk through joint ownership. This could involve the institution contributing land or a building into the partner‐ship in return for a percentage of equity within the partnership. The developer contributes the remaining equity in the partnership while obtaining project financing and assuming all construc‐tion risk. Private‐Public‐Municipal The newest concept has been coined the “Three Ps” – public‐private‐public partnerships. Under this scenario the university, developer, and municipality have a mutually beneficial project that will benefit the university and the community as a whole. Typically this partnership utilizes a student housing project adjacent to or near campus to anchor a new mixed‐use commercial development that creates an extension of the university’s campus. The partnership unifies resources and establishes a synergy between the school and municipality mutually benefitting all parties and the community as a whole. Under this scenario, the university has very few (if any) capital expenditures by entering into a long‐term lease with the developer. The developer leverages the lease to help finance the construction and retains ownership of the buildings, resulting in new taxable properties for the municipality.



Recommendations Based on our assessment of student demographics and characteristics, the existing supply of rental housing in Worthington, and comments from students during the focus group sessions, we find that demand exists for additional student rental housing near campus. Table 13 shows our preliminary recommendations for a new student‐oriented rental apartment community based on current market conditions. Based on the unit mix breakdown show in the table, a 35‐unit project would create 105 new bedrooms which fits within the range of pent‐up student housing demand as depicted in Table 12. We also understand that the college has ample land that could be subdivided for future student housing. Because of the excess land availability, we recommend setting aside addition‐al land for future housing development should the need arise. Based on the success of the first phase, future apartment‐style buildings could be constructed adjacent to the property and adjusted based on market preferences.

Unit Mix and Pricing Table 13 displays our recommended development program for apartment‐style housing on or adjunct to the MnWest campus. Because development costs are likely to be high, the unit mix targets roommate household types that will be the most economically feasible and acceptable in the marketplace as many students are very price sensitive. The proposed rents are higher than existing apartment product, but students will pay a premium for new construction and for proximity to campus. On other MnSCU campuses, students have been willing to pay upwards of $100 to $200 more for new housing that is conveniently located and offers contemporary amenities. Given the price sensitivity in Worthington, we suggest a price premium of about $100.

Unit

Mix

Average Cost

Per BR

2‐Bedroom 25% 825 ‐ 900 $725 ‐ $850 $0.88 ‐ $0.94 $394

3‐Bedroom 40% 1,050 ‐ 1,250 $1,000 ‐ $1,175 $0.95 ‐ $0.94 $363

4‐Bedroom 35% 1,300 ‐ 1,550 $1,250 ‐ $1,400 $0.96 ‐ $0.90 $331

100% Median = $0.94

Note: Rent should include all utilities, basic cable, and Internet

Source: Maxfield Research, Inc.

TABLE 13

PRELIMINARY UNIT MIX/SIZE/RENT RECOMMENDATIONS

MnWEST WORTHINGTON

January 2013

Average Square

Feet

Average Rent

Range

Average

Rent/SF



Finally, in order to achieve these rents, the land may need to be discounted in order for the development to be financially feasible. Unit Features and Amenities Units should have the following features:

Individually climate controlled with central air;

Full kitchen appliance package including dishwasher, microwave oven, and disposals;

Kitchen center‐island (may double as study table);

Open living area for maximum flexibility in furniture placement;

In‐unit washer/dryer (optional);

Individual bedrooms with separate locks;

Compartmentalized bathroom(s) suitable for sharing with roommates or private bath for each bedroom;

Small balcony/patio (optional);

Mini‐blinds;

All units wired for high‐speed Internet; recommend wireless system, but must be able to access the University’s Ethernet system;

Ample cable TV jacks, telephone jacks, and electrical outlets, and All of the monthly rents should include utilities (heat, water, trash), basic cable, and internet. Ideally, a building Wi‐Fi Internet connection would be preferred for most students. Finally, all of the units should be fully‐furnished. We recommend living rooms with a sofa/love seat, chairs, coffee table, and end tables in most units. Kitchens should include bar stools for a center island. Individual private bedrooms should include a full‐size bed, desk, chair, and dresser. Common Area Features

On‐site laundry room (only if in‐unit washer/dryers are not designed);

Bike racks for bike storage;

Storage area for seasonal or items that are not used frequently (fishing gear, bikes, etc.)

Central common area space with large screen TV for socializing;

Outdoor terrace deck with outdoor grills;

Fitness center (optional: due to the proximity of the YMCA this could be eliminated);

Management office;

Trash/recycling on each floor;

Enclosed quiet room(s) for studying;

Wi‐Fi access throughout building;

Computer lab; and

Building security.



Building/Construction Features

Greater safety and security within the building and outside of the building;

Better quality sound insulation/sound resistant walls; and

Incorporation of energy‐efficient design.

We cannot stress enough that noise reduction is always a critical issue for student housing developments. We also recommend surface parking with plug‐ins at a minimum; if possible garage parking could be offered as an extra monthly fee. Partnership Recommendation As previously outlined, there are a number of public‐private partnerships utilized for student housing development. Focus group students expressed a preference for a new project that has some affiliation with MnWest. We recommend a foundation structured partnership that reduces risk to the college, however allows the college to still maintain authority on the foun‐dation.

APPENDIX


APPENDIX

MN West Housing Focus Groups

November 28th, 2012

Welcome!

Please take a moment and fill out the tent card in front of you.

Please share the following:

Your First Name

Academic Year in School

Purpose & Goals

Focus Group Purpose:

Assist MnWest to better serve students’ housing need

Ground Rules…

Encourage Participation

All responses valid – No right or wrong answer

Confidential – “What is shared in the rooms stays in the room”

Only ONE person talks at a time

Introductions

Tell us about yourself:

• First name• Class status • Major/minor• Your hometown

Questions

• What is the primary reason you decided to attend Mn West? (i.e. program, cost, location, etc.)

• What type of housing do you live in? (i.e. apartment, single‐family home, townhome, etc.

• Do you currently live in Worthington? If not, where?

• Did the availability of housing in Worthington affect your decision to attend Mn West in any way? (Positively, negatively, did not consider)

Questions

• What do you dislike about your current residence?

• What do you like best about your current residence?

• What is your current living situation? (i.e. roommates, live alone, live with parents, etc.?

• How far do you commute to campus each day?

• How did you find your housing? (i.e. online, Craigslist, referral, etc.) How long did it take you?

Questions

• How much do you pay for your housing monthly? (i.e. gross w/utilities)

• What, if any, were the challenges to finding housing that suited your needs? (i.e. location, cost, amenities)

• If you could create your ideal living situation, what would it be?

• Would you pay more for housing that suits your needs? (i.e. location, cost, amenities, etc.) If so, how much?

Questions

• If MnWest offered apartment‐style housing on or near‐campus, would you be interested?

• If new MnWest affiliated housing had (fill in the blank), I would consider living on‐ or near‐campus.

Questions, Comments, Recommendations

Contact Info:Matt Mullins – Maxfield Research Inc. [email protected]

• Any additional comments about providing housing near or on‐campus? (i.e. cost, location, amenities, etc.)

Thank you for your time!

a student housing market feasibility study for minnesota€¦ · a student housing market...

Documents