CAPRE’s Carolinas Student Housing Forum Preview: Q&A with NDG Student Living’s Jerry Wojenski
RALEIGH, NC — The professionals at NDG Student Living, under Newman Development Group, have developed over 5,000 beds of student housing valued in excess of $260 million with an additional 2,000 beds currently under development. In addition, NDG Student Living manages over 1,100 beds in third-party management agreements with other clients, totaling the student bed count to over 2,500. Their comprehensive Student Housing development model creates projects that serve the interests of their students, parents, colleges and communities. With over 15 years of experience in student housing, Jerry Wojenski, the CEO of NDG Student Living, leads his team in managing these student-only live/learn communities. Prior to joining NDG, Jerry held various progressive roles at EdR, ACC and Campus Apartments. Jerry will be a featured speaker at CAPRE’s Carolinas Student Housing Forum, so we connected with him to discuss why the Carolinas are primed for this industry.
CAPRE: Thanks for chatting with us today. Share with us a bit about your firm and how you got involved in student housing.
Wojenski: Newman Development Group started off as a development company that then saw a niche in developing student housing. After some time, they decided to vertically integrate and create an in-house management group that focuses on student housing management and operations, NDG Student Living. Since then, the company disposed a lot of the legacy portfolio and started building up a new portfolio of assets – more on the acquisitions side. As of late, we’ve seen a growth stage, especially in our third-party management.
CAPRE: What’s the latest in your neighborhood?
Wojenski: We recently acquired a property in North Carolina owned by a mom & pop group located in Winston-Salem, servicing students of Wake Forest University. With only seniors and graduate students allowed to live off campus at the university, the total renter pool is only about 2000 students, making it a very small market. Because of that, most investors wouldn’t look at a deal like this, but we saw a management opportunity with this affluent demographic – 275 beds in a cottage-style product. We’re pre-leased to nearly 100% for the next 2 years, and we’re building more home, putting more supply into that market. We’re also looking into tailoring some housing to the graduate student population, in the form of one and two-bedroom units, since there’s not that much of that currently in the market. The way we see it, we can push rents and kind of own that market, so we figured, why not?
CAPRE: Was that your first type of deal like that?
Wojenski: Yes, that was the first-Tier III type of deal we’ve ever done. Given the caprates on Tier II and Tier I, it might be something to look into with other opportunities. Aside from that deal in North Carolina, through our client partner, we’re aggressively in acquisition mode with recent acquisitions in Albany, Buffalo and Greensboro, with another 3 in the pipeline closing in the next 4 months.
CAPRE: So what are some of the biggest challenges of working in the Carolinas?
Wojenski: There’s a lot of dry powder. There aren’t many deals in the market and the ones we’ve found so far have often been underwater. Some of the issues we have when looking at acquisition is that there’s a lot of money chasing deals. People are looking at North Carolina and South Carolina and seeing the population growth, running their numbers and realizing that enrollment is set to increase, making these attractive markets to do long-term holds of about 7-10 years. Therefore, a lot of investors are holding onto their assets and underwriting the deals becomes more difficult
CAPRE: What about on a more local level?
Wojenski: A lot of counties in North Carolina are going through a reassessment. Between now and next year, underwriting the potential impact of those reassessments is going to be very difficult. There’s going to be a lot of pent up demand in these markets, making it easy to make deals work on paper. In markets like NC State University a lot of new supply came online and rent growth was flat for a bit, but now that supply has all been absorbed and everyone is enjoying healthy occupancy and healthy rent growth. Chapel Hill is another market where there’s a lot of unmet demand, especially with more pedestrian-friendly core-type assets. Plus, the town there is very difficult and have high standards when it comes to developing assets, creating a lot of barriers to entry. But the right developer who knows how to get a project done can have success. Pedestrian-core is definitely an opportunity.
CAPRE: What are you looking forward to about CAPRE’s upcoming Student Housing Forum?
Wojenski: It’ll be great to discuss the future of the Carolinas. In the early 2000s, a lot of student housing actually started in North Carolina and the first privatized student housing, arguably, was at Chapel Hill, so it’ll be nice to have a conference where it all started.
However, the development pipeline has really slowed down in North Carolina, and picked up in South Carolina and I want to see, from the people actively engaged in that market, if North Carolina is due for a resurgence. Is the pipeline going to be growing there? Where is the pipeline of supply headed in South Carolina? There were markets like Columbia which were great, but are now struggling with over supply. It’ll be great to have a conference to discuss these topics and what the future may hold.
CAPRE: What could the Carolinas do better to support the student housing arena?
Wojenski: It’s really a market-by-market issue. But in Wilmington, for example, we’ve had a little too much supply. And in some markets like that, there needs to be more control. Occupancy is on a downward trend and it’s only going to get worse with on-campus developments. In other markets like Chapel Hill, where there is pent up demand for student housing, the approval and permitting process could be more developer friendly. To contrast, if you want to build student housing in Blacksburg, VA, the town council makes it painful. They think the students will just live wherever you build it.
CAPRE: Tell us more about why that’s not the case.
Wojenski: These towns need to realize that if you have a university, you should support those students with pedestrian-friendly product. That’s where we’ve been trending as an industry as a whole, getting students closer and closer to campus. This is beneficial for students because they have easier access to resources, such as the library, improving their academic success. It also builds a better college town environment, having students in close proximity to each other. Lastly, it’s simply safer to be closer.
CAPRE: So what’s the bottom line here?
Wojenski: The bottom line is that, any way that towns can encourage developers to build pedestrian core product near campuses will only benefit the town, the region and the cities. It should be encouraged, not discouraged.
CAPRE: Got it, thanks Jerry. We’ll see you in Raleigh!
Hear more from Jerry at CAPRE’s upcoming Carolinas Student Housing Forum May 9, where he will participate in the 9:30 am – 10:30 am panel “Carolinas Student Housing 360: Development, Investment & Leasing Activity in 2019.”