A Chicago student housing investor is trying out something new in Lincoln Park: a dorm that caters to both college students and young professionals.
A joint venture including the Scion Group bought a 580-bed student housing complex at 1237 W. Fullerton Ave. that now mainly rents to DePaul University students. Scion President Robert Bronstein plans to change that by marketing the property, called 1237 West, to recent graduates who aren’t quite ready to give up the communal living of their college years.
"I’ve had this idea for years, and I really want to test it," he said.
Called "co-living" by some, it’s an idea gaining currency in big cities where apartment rents have soared, offering a low-cost alternative for young grads who don’t make enough money yet to afford their own place.
The concept has yet to take off in Chicago, but the developer of L, an apartment building in Logan Square, is giving it a shot, offering single rooms for rent along with full units.
"It’s an appealing product type to people who are slightly older (than college age) but value flexibility," Bronstein said.
Scion plans to continue renting to students at DePaul and other Chicago colleges, but with the building’s occupancy rate hovering in the 85 to 90 percent range, Bronstein figures he can fill it up by renting to young professionals. The arrangement also may appeal to doctors in residency programs, who spend most of their time working, he said.
Monthly rents at 1237 West start at $964 a bed.
Scion bought the building in a joint venture with the Canada Pension Plan Investment Board and GIC, Singapore’s sovereign wealth fund. The Lincoln Park building was one of 29 student housing properties the venture bought for $1.9 billion in recently completed deals with different sellers.
In one of the transactions, another Chicago investor, Harrison Street Real Estate Capital, sold Scion and its partners 11 properties in places like Chapel Hill, N.C.; Madison, Wis.; and Charlottesville, Va., for a combined $640 million. In another, the Scion venture paid Dovetail, a student housing company based in Athens, Ga., $385 million for properties near the University of Alabama, Florida State University, Clemson University and other big schools.
In the rest of the deals, the Canada Pension Plan and GIC recapitalized existing Scion properties by buying out Scion’s original investment partners.
Altogether, Scion and various partners now own 45,918 student housing beds around the country, making the firm the second-largest student housing owner in the country, after Austin, Texas-based American Campus Communities, with 85,755 beds, Bronstein said, citing figures from Student Housing Business, a trade magazine. Harrison Street is third, with 45,895 beds.
Scion and its partners arguably have been the most aggressive student housing investors in the country over the past few years. Though Bronstein expects to cut back on deals to focus on digesting the recent acquisitions, they could be back in the market by year-end.
"I definitely see us looking to buy another 15,000 to 20,000 beds in the next year or two," he said.
The joint venture bought the Fullerton Avenue building from a nonprofit affiliated with DePaul University. Bronstein, who played a key role in developing the building back in 2006, declined to disclose a price.
If the co-living experiment works there, Scion could expand the model in Chicago or other cities, he said.
"I believe that because of our background in student housing that we have a unique perspective on it," he said. "We cater to a cohort that’s only a year or two younger."