RRAC University Apartments II LLC (Vadia Development Inc.)

Coral Gables,

Student Housing Market And Financial Analysis

In 2013 B&D was engaged by RRAC University Apartments to conduct a market study for an off-campus housing development near Florida International University’s Modesto A. Maidique Campus. We were tasked with determining whether demand was sufficient to support the development of the proposed Plaza II housing development, which would consist of 562 apartment-style beds and ground floor retail. The university had experienced 19% enrollment growth between 2008 and 2012, and its strategic plan indicated that growth was expected to continue, underscoring the need for additional student housing. Our scope of work commenced with a tour of the project’s site and interaction with Florida International’s campus community. A detailed market analysis followed, consisting of a demographic analysis of the existing and future student population, an off-campus market analysis of 12 nearby residential communities to assess the competitive environment, and a demand analysis to quantify the total potential target market group’s demand for off-campus housing. We also reviewed RRAC’s financial model for the project and provided feedback regarding the financial feasibility of the project. Several key findings arose from our work. It was determined that sufficient demand existed to support the targeted 562-bed addition, and the proposed apartment-style configuration aligned with the demand generated by the target market group. In addition, the university’s anticipated enrollment growth mitigated risk, especially the enrollment of full-time students, who are more predisposed to seek rental housing. Barriers to new construction were another competitive advantage for the project, since developers faced challenges acquiring contiguous properties in the area. Stemming from our scope of work and resulting findings, we also developed a series of recommendations that aimed to mitigate vacancy and financial risk and ultimately to position the project for success, including implementing a robust pre-opening marketing strategy, unique lease terms, and financial pro forma adjustments to both lower the risk of not meeting the expense budget and assist in securing financing.