In the nineteenth and early twentieth centuries, cotton production was a staple of America's Southern economy. Even today, the United States is one of the world's largest exporters of cotton.
But cotton has some problems. Grown year after year, cotton depletes the soil. Before commercial fertilizers became available, cotton growers simply grew cotton on a plot of land until the ground was exhausted and then moved on to places where the land was still fertile.
Something similar is happening in the luxury student-housing market. All over the country, college towns are seeing a boom in student-oriented apartment developments. Developers buy relatively cheap land near college campuses, build so-called luxury apartments, rent them to college students and then sell the units to new investors--often pension funds and private-equity funds.
Is this a good thing? From an investor's standpoint, luxury student housing is profitable. According to one source, students pay a higher rate per square foot of space than other tenants, and students can take out student loans to pay the rent.
Even better, there is a never-ending supply of new students to keep the apartment buildings full.
But, just as cotton exhausts farmland, student housing gets run down over time, causing maintenance costs to go up. Moreover, college students are famously fickle renters, and they tend to search out newer apartments and offer more amenities than their old digs.
As newer and more luxurious apartment complexes come on the market, older apartment buildings become harder to fill. Rent prices go down, maintenance gets deferred, and then the luxury student apartment complexes of yesteryear become the slum districts of today.
We see this happening in the college town where I live. As the Baton Rouge Advocate noted in a recent news story, the Tigerland neighborhood south of Louisiana State University is "the storied college bar district and surrounding housing options once considered some of the most luxurious for LSU students. . . ."
But most of the Tigerland student apartments were built in the 1960s and 1970s, and they have seriously deteriorated. Several have been converted into so-called "Section 8 housing," housing for low-income households who receive public assistance.
This is no problem for the present generation of college students. They have their pick among hundreds of newer apartments that offer more amenities--fitness centers, swimming pools, recreation rooms, etc.
Meanwhile, Tigerland has become notorious for crime, including murder. The Sandpiper Apartments on Tigerland Avenue are so infamous that Hillar Moore, the local district attorney, attempted to shut the place down as a "legal nuisance."
According to a 2021 newspaper article, Moore said the police had received 195 calls at the Sandpiper since 2016, an apartment complex with only 14 units!
The Sandpiper's owner asked the judge and prosecutors to be more sympathetic:
"If they shut me down, they should shut down the whole place," he said after the hearing. "The entire neighborhood needs to be condemned, to be honest. You would be appalled to know some of the crimes that are happening there." [As quoted in the Baton Rouge Advocate]
On the bright side, Tigerland is only a short walk to the LSU campus, and the rents are reasonable.
Why should I care whether the neighborhoods around LSU are becoming slums? After all, I'm a retired professor, not a college student.
But I live in College Town, an old subdivision near the LSU campus. The Sandpiper, which the district attorney tried to shut down, is located only 1.3 miles from my home.
|Tigerland--only a short walk to the LSU campus