Students attract investors

Ram Realty Services can thank those babies of baby boomers for $4.5 million.

The Palm Beach Gardens, Fla., company sold the Ivy Chase student apartment complex at 3351 Cum Laude Court in West Raleigh to a group led by Julian LeCraw & Co. of Atlanta for $23.3 million -- 24 percent more than what Ram paid in 2001 for the 262-unit, 546-bedroom complex just southwest of N.C State University.

Student housing has attracted investors who feel protected by ever-growing student bodies, fueled by the children of baby boomers.

Nationally, the median price per student housing unit was $117,482 in the year ending March 31, up 26 percent from the previous year, while the price of all other kinds of apartment units dropped 7 percent to $89,641 per unit, Real Capital Analytics data shows.

The Triangle, with its steady job growth, has seen a flood of apartment investment. During the first quarter, investors spent at least $212 million on Triangle apartment complexes, one-fifth of last year's record $1.1 billion, but still more than halfway toward surpassing the 10-year annual average of $354 million, according to CB Richard Ellis data. More are coming. Last week, investors led by DRA Advisors paid $29.9 million for the 319-unit Harrison Grande apartments in Cary.

Student housing in the Triangle -- particularly in West Raleigh -- may seem like a particularly safe investment, especially when you consider NCSU and Meredith College welcomed a record number of freshmen last year. And the apartment vacancy rate in West Raleigh was 6.4 percent at the end of March, down from 9.7 percent three years ago, according to the Triangle Apartment Association. Rental rates in the submarket climbed 5 percent to $742 per unit -- the kind of thing investors like to see.

Some see that as a chance to build. Place Properties of Atlanta last year revealed plans to add 168 units, or about 624 beds, to student complex Wolf Creek, off Hillsborough Street, west of Buck Jones Road.

Ram saw it as an opportunity to cash out and dump money back into new development.

It has several projects planned in Chapel Hill, another town crawling with college students.

But Ram's projects aren't exactly geared toward them. Ram actually plans to demolish Townhouse Apartments, a close-to-campus haven to University of North Carolina students for four decades, to make way for one of the town's biggest condo projects. It also is eyeing condo-and-retail projects in Raleigh and Durham.