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Aggie Station employees have a problem most apartment managers can only dream about -- turning people away because the complex is full.
The heavily student-populated community off Wellborn Road in College Station almost always stays at a 100 percent occupancy rate, said General Manager Tye Crenshaw.
It's a problem most complexes aren't having, since the availability of places to rent is increasing and occupancy rates are dropping across Bryan-College Station.
Local occupancy rates fell from 97 percent during the third quarter of last year to 94.3 percent for this year's first-quarter report, according to a market survey conducted by Apartment Realty Advisors, a nationwide investment advisory service firm with an Austin presence.
While that percentage still is fairly strong, Kelly Witherspoon, who works with the firm, said experts are predicting that the number may continue to decrease slightly for the next few semesters. Witherspoon said that 2,500 more beds would be available in Bryan-College Station in the fall and that everyone was wondering whether all the new units would be absorbed.
Rent growth has been strong mainly due to a limited number of new projects that have come online within the last few years, coupled with record enrollment at Texas A&M for several semesters in a row, Witherspoon said.
It's increased a "very respectable" 4.44 percent over the past year in Bryan-College Station, according to the market survey.
When there is minimal new supply and more students coming to the apartment market that is already tight, properties are able to increase market rents, Witherspoon said. That's because there is a heavier concentration of clients looking for a place to live, Witherspoon said. Pre-leasing numbers on by-the-bed communities are behind last year's numbers, he said.
"It's similar to musical chairs," Witherspoon said. "As you keep going on through the music and they're picking up chairs, you have more people fighting for less product, allowing demand to outweigh supply. What you have being created now is exactly the opposite with the new supply pipeline: too many chairs for everyone to sit. Only time will tell."
Rush of new units
When Aggie Station fills up and students still are knocking on the door, Crenshaw said, the complex keeps a waiting list but otherwise has to turn people away.
He attributed the high occupancy rate to the complex's requirement for 12-month leases, its relatively small size with 156 units and its effective marketing to students.
"It's a good problem to have," Crenshaw said.
As of April 15, for class A by-the-bed properties -- newer properties with high-quality finishes, Aggie Station, Crossing Place and The Gateway at College Station -- all had 100 percent occupancy rates, according to the report.
The company uses the report to help owners understand what's happening in their market and to persuade people to move to Bryan-College Station or buy in Bryan-College Station, Witherspoon said.
The most interesting thing the report highlights, Witherspoon said, is the change in the availability of units.
A rush of new units came online in College Station in 2000, which saturated the market, he said. The university wasn't growing as quickly then, and it took awhile for the units to be absorbed. The city bounced back in 2005, but now several new locations have been added to the market, he said.
"The reason it's lagging a bit is you're having 2,500 more beds that are competing for the same students," he said.
With the new properties online, some will be struggling come August to lease all the beds, he said.
"Historically, College Station has been an early leasing market. Somewhere around Spring Break or slightly before is when a lot of the activity starts to happen for the fall semester," he said. "It seems like it's a little behind right now."
"Historically, College Station has been an early leasing market. Somewhere around Spring Break or slightly before is when a lot of the activity starts to happen for the fall semester," he said. "It seems like it's a little behind right now."
Student effect
Witherspoon said the most comparable city is Huntsville, home of Sam Houston State University. That market, too, has overbuilt.
The third-quarter occupancy rate for last year in Bryan-College Station was slightly inflated because Hurricane Ike pushed Texas A&M-Galveston students into the area to take classes for the semester, according to the report. The average occupancy rate for the by-the-bed properties fell from the third-quarter figure of 94 percent to the current 88.7 percent.
"All those students left at the end of the semester and went back to Galveston," Witherspoon said.
Continuing to set records, Texas A&M University reported a spring 2009 enrollment of 44,720 students, surpassing the previous year's record enrollment of 43,751, according to the report.
The average rent for the conventional 16,623 units in the study was $813 per unit, averaging 856 square feet, according to the report. A conventional unit is any apartment that has one lease for the residents to sign, not by-the-bed leases, Witherspoon said.
For 8,234 beds or 2,984 units that rent on a per-bed basis, the average rent was $512 with an average of 385 square feet per bed, according to the report. That is a 2.67 percent increase from the third-quarter study of last year, he said, when the average rent was $499.
Conventional one-bedroom units had an average rent of $779 per unit with 617 square feet on average, according to the report. Two-bedroom units had an average rent of $550 per bed. Three-bedroom units averaged $493 per bed, and four-bedroom units averaged $478 per bed.
By the section
The southeast sub-market of Bryan-College Station saw the largest rent growth from the third quarter of 2008 to the first quarter of 2009, 1.8 percent, with units averaging 830 square feet and rent per unit of $730, according to the report. Average occupancy for the southeast area was 94.5 percent.
The northeast area had the highest occupancy, 95.5 percent, with an average unit size of 873 square feet. Average rent per unit was $799.
With the largest concentration of conventional and by-the-bed units, the southwest area of Bryan-College Station had an average rent of $881 per unit with an average occupancy of 94.4 percent, according to the report. Its rent growth was 1.44 percent, with an average per-unit size of 864 square feet.
Seeing minimal rent growth of 0.19 percent, the northwest sub-market had the lowest occupancy of any sub-market at 91.9 percent. Its average unit size was 823 square feet with a rent per unit of $588.
"I think the biggest question mark will be how the new supply is received and where our occupancies stand for the [third-quarter] survey after a couple weeks of the start of school," Witherspoon said. "Our feeling is there will be some projects that are going to feel some pain. With student properties, lease-up is everything. If you're sitting at 80-percent occupancy after the fall semester starts, you'll be sitting close to that occupancy until the following summer."
