Hundreds of new student housing units coming online in downtown State College are creating competition for property managers and owners of older units.
"I think you see people who are advertising that never had to advertise before," Jim May, Centre Regional Planning Agency director, said last month.
It's affected the market, said John Hanna, president of Continental Real Estate Management, which manages 450-500 student units. Newer apartments make the older ones "less appealing from an aesthetic point of view," and it's holding down the rent.
So Continental Real Estate Management, like other property managers, is telling its owners to upgrade their units — new flooring, kitchens, bathrooms, furniture.
"The more they do, the higher the rent and the higher the probability that they're going to be rented," Hanna said.
Mark Bigatel, president of Associated Realty Property Management, which manages about 1,200 units downtown, said the market is "saturated" with new student housing complexes, both downtown and in the surrounding area.
He said ARPM has a vacancy rate it's never had before (2-3 percent last year), mostly in the two- and three-bedroom units.
"We're doing whatever we can to fill those," Bigatel said.
Hanna said he thinks the market, in the long term, will stabilize and reach "equilibrium" again. He expects that the rate of increase in rents will also slow down.
State College Borough Council President Evan Myers said by building more apartments right in the downtown, it'll alleviate some pressure in the neighborhoods — where homes rented to students can be converted back into single-family homes. He said that will help stabilize the neighborhoods and increase the tax base.
With new student housing options, May said it might be an opportunity to think about affordable housing.
"We think as students move to newer facilities, maybe some of these older places ... could be affordable housing or lower cost rental housing for people in the region," he said. "So we're trying to figure out what's happening to that part of the market. That's kind of the other side of the coin to the student housing is it might be freeing up units, hopefully stabilizing some of the cost as well. We're not sure of that yet, but we're gonna try to figure that out in the next year or two."
Bigatel said he thinks there's an opportunity for some of the properties on the "outskirts" to provide low-income housing, but not the units in the downtown.
A lot of the units that Continental Real Estate Management manages are condominiums, so they have many different owners in their large buildings, like Beaver Plaza, the Ambassador and Beaver Terrace, Hanna said.
To convert a building like that, that's near campus, to young professional or affordable housing would be "almost impossible" to get all over the individual owners to agree on that concept, he said.