Luxury housing boom transforms student life at U of M

As a freshman, Ashley Gilles and three roommates squeezed into a teensy dorm room in one of the University of Minnesota's oldest residence halls.

There was no elevator, no kitchen and doing laundry required a five-minute walk.

"It was like an insane asylum,"said Gilles, describing the building's white block walls and narrow halls. "It didn't have air conditioning and all the basic things that I grew up with."

Gilles now shares an upscale apartment two blocks from campus at 412 Lofts, one of the student apartment buildings sprouting up around the U. Not only is Gilles loving her new kitchen with granite countertops, she no longer has to schlep her laundry around campus because a washer and dryer are in the unit. "It feels more like home," said Gilles, now a senior.

Gilles is part of a generation of 20-somethings fueling a housing boom around the U, where mostly private developers are building more than 2,500 upscale apartments and have approvals for another 1,800 units. The new housing has transformed campus living, offering students upper-crust amenities like yoga studios, heated garages and rooftop party rooms.

"There has been a flight to quality," said Mary Bujold, president of Maxfield Research Group.

Experts say the trend reflects changing demographics and higher expectations among young people. Studies show that a growing number of students, mostly Gen Y-ers aged 18 to 34, want to live close to work and school. Bujold said that just in the past decade, the number of campus commuters is down 20 percent. Those students are more than willing to sacrifice space for high-end finishes in well-appointed apartments.

Brent Wittenberg, a market expert with Marquette Advisors, calls it a desire for "shared luxury." But such upscale living has been in short supply around the U, where student housing has been more synonymous with keggers and code violations than fancy digs.

Kelly Doran of Doran Companies is trying to raise the bar. He is starting construction on his fifth and most ambitious student housing project, an 11-story concrete and glass tower called The Bridges. The building at the corner of 10th and University avenues SE. next to Interstate 35W promises views of downtown Minneapolis and the Mississippi River, along with a yoga studio and an outdoor kitchen for its student renters.

"It will be an iconic building as you enter campus," Doran said. He expects it to be ready for occupancy by fall 2014.

Daniel Oberpriller, co-founder of CPM Development, said there has been a dearth of construction around the U, compared with what's happening across the country. The U is "just catching up to where other markets are now," he said.

Opus Development Corp., which has done student housing around the U, has more than 700 units in development in other Midwestern cities.

Fears in Dinkytown

Competition for undeveloped sites near the U — mostly surface parking lots — is stiff, so Oberpriller and others are focusing on finding redevelopment opportunities. That means tearing down existing buildings, which raises the hackles of some who believe those neighborhoods will lose their character.

That tension has been especially strong in Dinkytown — the eclectic commercial district just north of campus — where a new group called Save Dinkytown has a slogan that says, "It's Dinkytown, not Megatown."

"It's been really exciting, and the U of M is seeing a lot of change," said Gilles. "But a lot of people are feeling like there are already too many new buildings and they don't want to see high-rises in the heart of Dinkytown."

Oberpriller recently announced plans to build WaHu, a 333-unit apartment building that will replace an Arby's and CSL Plasma at Huron Boulevard and Washington Avenue SE.

In Dinkytown, Chicago-based GEM Realty Capital Inc. plans to build more than 300 apartments on the former site of Marshall University High School. Across the street, Opus has created a stir with its plans to build a 140-unit apartment building on several parcels, including one that's home to the House of Hanson grocery store.

Dave Menke, senior vice president and general manager with Opus, recognizes that such projects will bring change to the neighborhood, but he said market forces are strong. "A large number of colleges and universities are underserved in their housing stock," he said.

The U is responding to those housing demands. MA Mortenson is nearing completion of the 17th Avenue Residence Hall, a $62 million facility being built by the U. It will have more than 300 units with 600 beds and will cater to freshmen and members of nearby fraternities and sororities.

'All I've really ever known'

Students like Alex Johnson, are thrilled with apartment living. The architecture major at the College of Design lives in a two-bedroom, two-bath corner unit at Opus' Stadium Village Flats.

His apartment has big windows and is less than a block from the heart of campus. He pays $644 per month and shares the space with three roommates. He knows that's not cheap for a shared bedroom, but he appreciates the luxury.

"I just turned 20 years old a couple of days ago and live in a place with granite countertops, quality furniture and a view like none other," he said. "I have to say that the reason I've grown to expect apartments to be so luxurious is because that's all I've really ever known."

This fall, Johnson will move to the Elysian, a 56-unit building on 4th Street SE. that's being developed by CPM. He'll share a three-bedroom, two-bath apartment with five roommates, but the top-floor apartment has more than 2,000 square feet, including a den and a 400-square-foot balcony. He'll pay $680.

"Once you live in one of these properties, it's hard to get out and learn to expect less," Johnson said.

He's not surprised that demand has been strong at the Elysian, which is fully leased for fall move-ins. Residents will have access to a tanning bed, a lounge with free coffee and a patio with a fireplace.

"I can't tell if it's a good thing or a bad thing," Johnson said. "I can't tell if these over-the-top luxurious units are creating monsters out of students or rather if they are instilling a drive in them to work hard so that one day when they get out of college they can own a place like these units rather than rent them."

Jim Buchta • 612-673-7376