Sept. 7 2016 09:57 AM

Will young professionals rent in student-driven site?

The $90 million SkyVue apartment building is still under construction, but developers are already offering leases to MSU students.
Todd Heywood/City Pulse

The massive $90 million SkyVue project under construction next to Frandor was approved by Lansing with the intent that it provide new and needed apartments for young professionals. Now it appears that the market for the development is primarily students.

The developer’s marketing pitch and its pricing “by the bed” reflect the practices used by the region’s large student housing providers. Each apartment comes fully furnished and renters are prohibited from bring their own furniture to the apartments.

“This is student housing,” said Jody Washington, First Ward City Councilwoman and chairwoman of the Development and Planning Committee. “I don’t care that it’s students. Just be honest about it. This is about honesty and transparency. It’s lacking.”

But Bob Trezise, president and CEO of Lansing Economic Area Partners, LEAP, which helped broker the deal, defended the development. He said the project has “market rate apartments,” which would be “marketed to young professionals.” He said developers originally proposed a 100 percent student housing development, but LEAP officials convinced The Rise from Atlanta to make 144 to 146 one-bedroom apartments for young professionals, or about 43 percent of the 337 units under construction.

“We were excited to have turned this building from 100 percent student housing into mixed use," Trezise added.

Matt Marshall, vice president of The Rise, said Tuesday that the number of one bedrooms would be much smaller— more like 10 percent — if SkyVue was aimed only at students. "It's very odd to have that many one bedrooms" in a student complex, he added.

"When we started researching this market," he said, "we found something unusual to us: a larger number of younger professionals living in student housing" in the Lansing market.

However, the company’s website — LiveSkyVue.com — has nothing about young professionals. The lead information on the site calls the development “SkyVue Student Apartments near Michigan State University.”

The Rise has also hired EdR, a Memphis, Tenn., company that bills itself as “a leader in the collegiate housing industry since 1964" on itswebsite, EdRTrust.com.

The company recently opened a leasing office on Grand River Avenue in East Lansing, across from the MSU campus.

Asked to cite any marketing aimed at non-students, Marshall said he didn't know of any off the top of his head.

But he added that even when a complex is aimed at students, "it doesn't stop non-students from leasing."

SkyVue leasing officials said the new development will have 143 one-bedroom units, 48 two-bedroom units and 146 four-bedroom units.

Katie Larner, manager for EdR’s SkyVue leasing operations, said she had “823 beds” to rent, reflecting the leasing model found mostly in student housing. Under the current leasing model, EdR is offering private bedrooms and bathrooms in both the four-bedroom and two-bedroom models. The cost per person ranges $870 to $900 for the two-bedroom units, and $710 to $729 per person for the four-bedroom apartments.

The four-bedroom units are renting for $1.73 to $2.15 per square foot, or $2,840 to $2,916 a unit. SkyVue’s twobedroom apartments will be renting for $1,740 to $1,800 a month, or $1.80 to $2.19 a square foot.

By comparison with a complex aimed at professionals, the Stadium District two-bedroom, two-bathroom units are renting for $1,200 to $1,550 a month, according to apartments.com. Some of the Stadium District Apartments are fetching as high as $1,460 to $1,900 a month, according to the website, or $1.16 to $1.70 per square foot.

One bedrooms at SkyVue are going for $1,235 for 637 square foot unit. That’s $1.93 per square foot. At the Stadium District, a 597-square-foot bedroom is renting for $1,010 to $1,325, or $1.69 to $2.21 per square foot.

SkyVue has set strict limits on occupancy. Leasing officials told City Pulse that the apartment floor space is not large enough to allow three people to reside in the two-bedroom units, and that even if a couple did want to lease a two-bedroom unit, they would be required to execute separate leases — one for each bedroom.

However, Marshall said Tuesday that if an individual or couple wanted to rent a two-bedroom, "I suppose we could do that."

The current plan’s variance with the original proposal shows up in the 25-year, $25 million Brownfield reimbursement deal, where the developer, Rise, promised apartments for young professionals “as well as student housing.”

It stated: “The developer proposes to construct an approximately 9 story 667,062 ft commercial and residential complex with first floor retail space and 605-space parking deck,” the agreement reads. “The building be uniquely urban in its design and significantly caters to market rate seeking young professionals as well as student housing. To capture the market rate seeking young professionals, a large portion of the 359 residential units will be one-bedroom units. The development will assist in the continued transformation of Lansing’s Michigan Avenue.”

“Oh I am definitely marketing to young professionals,” said Larner. “We are just getting started.”

Currently, the company's website touts its roommate-matching service as well as other amenities like free wifi in what it promotes as “SkyVue Student Apartments near Michigan State University.”

In the Lansing region, as in other college towns, the student housing market is lucrative. The most recent large multi-unit apartment developments in the region have been for student housing.

Still, the student-focused marketing is concerning to some on the City Council.

“To a degree, the development was framed as ‘catering to market rate seeking young professionals as well as student housing,’” said Council President Judi Brown Clarke. ”It appears that the marketing efforts are more targeted on students, with less emphasis on young professionals.”

Washington, Brown Clarke and Trezise do not believe housing students is a problem in itself.

“In this building, the city will enjoy a mix of MSU students and others. Good!” Trezise said. “The City of Lansing loves MSU students and loves them living in the city. Naturally, Rise’s marketing materials will include sales to students. Why wouldn’t it? But that isn’t the total story of the building.”

Trezise also points out that all the residents in the development will be subject to Lansing’s 1 percent income tax, bringing in thousands of new dollars into the city’s shrinking budget.

Said Browne Clark: “Overall, I am very pleased with the SkyVue development and its pace to completion. It will be a wonderful asset to the Greater Lansing community. I wished more local labor was used during its construction, and look forward to seeing more marketing efforts towards young professionals.”

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