Student housing market heats up

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With the release of its fifth Urban Housing Study, the Springfield Finance and Development Corp. now has more than two decades of data regarding the Center City market for lofts and apartments.

The newly released study points to a continued shift from the development of loft housing to a focus on student housing and significant changes in how people live and work in the urban center.

The data cover Center City, which encompasses the downtown and Commercial Street districts, and it is bounded by West Bypass to the west, the city limits to the north, National Avenue to the east and Grand Street to the south, according to Rusty Worley, executive director of the Downtown Springfield Association.

The first study was commissioned in 2002 from Springfield-based Southwest Valuation LLC, and subsequent studies took place in 2007, 2012 and 2017. The 2023 study cost $4,000.

The initial 2002 study found 45 residential loft units among some 16 buildings. The number rose steadily from the beginning of the local movement, with subsequent studies showing 299 lofts in 2007, 506 in 2012, 849 in 2017, and 936 in 2023.

The 10% increase in the last six years represents a marked slowing from the 2002-07 period, when the market grew sixfold.

“The loft movement was just getting started when we began this,” Worley said of the study. “Our developers were using historic tax credits, many of them for the first time, as well as tax abatement and other tools to renovate our historic buildings and to get new uses in and to get lofts installed on the upper floors.”

As lofts have started to soften, student housing has taken off since the first entry into the niche in 2011, an eight-unit, 32-bed project at 450 E. Walnut St., according to the study. More and larger projects followed, to include the largest, Bear Village, with 620 beds.

“In the last five to 10 years, there’s been an arms race in student housing nationally, and Springfield has reflected that,” Worley said. “After we have the wave of loft renovations, then you started to see new projects like Aspen, 505, The Vue coming in and being new infill developments.”

The study identifies student housing as land use devoted exclusively to the housing of college students, with offerings typically comprising quad units with a private bathroom for each bedroom and a shared common area with a kitchen and living area within each unit, often with a high degree of amenities and utilities, and communication services included with rent. The developments tend to be multistory structures in close proximity to a university campus, and they take the place of traditional garden apartments and converted single-family residences, the report states.

A shift is happening, however, the report notes, with newer examples having fewer beds per unit as the market moves toward studio and one- and two-bedroom mixes instead of the traditional quad units.

The report states newer units, from the past five or six years, average slightly over two beds per unit, as compared with an average of 2.7 beds in the fall 2017 survey.

From the fall of 2017 to the spring of 2023, 710 new units have been established, the report states, rising from 900 to 1,610 during the period. Rent is up by 8.57% for student housing, to $697 on average, and occupancy has remained firm at 93% between the most recent studies.

More options
Worley said there are a lot more options for Center City housing.

“With this new product that has come on, which includes things like Bear Village, students and families do have a lot more options,” he said.

Only 42% of Springfieldians are homeowners, according to 2022 figures from the U.S. Census Bureau, and the most recent Community Focus Report, issued in 2021, identified a shortage of safe, affordable housing and an aging housing stock as red flags for the community.

Worley said the influx of student housing is a positive indicator for the market.

“Students now have bright, shiny new housing that’s available in some of these, and it might free up some of the single-family homes in the surrounding neighborhoods to go back to more single-family uses, whether it’s faculty and staff from the colleges or people who want to be near those campuses,” he said.

He added that the city’s campus areas are walkable and bikeable.

“There’s just an energy that’s around them,” he said. “It’s more active, there’s more arts and culture and there’s just more things to do – coffee shops, sidewalk cafes.”

As Springfield competes for talent across the country, loft housing can be a difference-maker, Worley said.

“Having these types of options, I think, is really important,” he said.

Springfield Finance and Development Corp. Board President Aaron Buerge of Legacy Bank & Trust Co. said the Center City housing market, which has 5,000 residents, has experienced remarkable growth over the past two decades.
“It continues to evolve and reflect national trends and demonstrates that downtown Springfield continues to see strong investment,” Buerge said.

Quality of place
The city of Springfield, through its Forward SGF master plan, has prioritized quality of place, including walkability. Among the top priorities of the plan are creating neighborhood commercial hubs, connecting to nature and beautifying corridors – all key parts of a thriving City Center, according to Worley.

In Springfield, some of those initiatives are centered on Grant Avenue Parkway, a multimodal approach to transportation extending from Sunshine Street to Jordan Valley Park, and on the re-naturalization of Jordan Creek downtown. For both projects, residential, commercial and office uses are envisioned, and some multifamily construction is already in the works.

A 2021 report by the Urban Land Institute outlined trends for urban development, and chief among them is a stronger connection between people and nature.

“The competition between cities (locally and internationally) to attract investment, business and residents will become even more fierce,” the ULI report states, noting a rise in cycling and alternative transport will likely continue to gain momentum.

Worley said he sees Grant Avenue Parkway playing an important role in the future of downtown living in a city that has a shortage of 14,000 affordable housing units, according to data from Community Partnership of the Ozarks. Getting Springfield to embrace multifamily concepts will be important to addressing the need, he said.

“Grant Avenue Parkway will be a prime candidate for some new concepts for that missing middle in housing,” he said. “You could have townhomes or pocket neighborhoods, accessory dwelling units – those types of things.”

Workforce housing will be a need moving forward, Worley noted.

“All these things are important for having a complete set of offerings in our community,” he said.