Business Booms for Dormitory Operator as Colleges Farm Out Housing

By ELIOT BROWN, Special to the Sun
October 1, 2007

As enrollments swell to record highs at New York City's colleges and universities, a private operator of dormitories is reeling in new business.

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Matt Rodigheri

STUDENT HOUSING. Educational Housing Services leases this residence hall to Pace University, one of a growing number of institutions in the city to outsource housing to the organization.

The nonprofit, New York-based Educational Housing Services has been experiencing a rapid growth in interest recently and is planning to more than double the number of beds it operates to about 7,000 over the next three years. Founded two decades ago, the organization's recent rise is an emblem of a broader trend among the city's colleges and universities, as the institutions feel pressure to expand at the very time the city's real estate prices are at a high point.

When the organization's president, George Scott, started the company, the real estate market was weak, allowing him to lease vacant buildings from developers at low costs and in turn contract out the rooms to local universities. One project gradually led to another, Mr. Scott said, and he now leases dormitory space to colleges throughout Manhattan. Students usually enroll in the space through their university, though the operators of the dormitories often are provided by Educational Housing Services.

In the late summer, the organization opened a 600-student dormitory downtown leased by Pace University, and Mr. Scott said he plans to open more than 4,000 beds in three buildings between 2008 and 2010. While Mr. Scott would not name the prospective tenants in his newest projects, his organization's existing clients include St. Francis College, the School of Visual Arts, and the New York Institute of Technology, among others.

"People kept hearing about us, and our appetite seems to be undiminished," Mr. Scott said. "Virtually every school with us is asking for more beds each year."

Fueling the rise of Educational Housing Services are two factors, Mr. Scott said: the rising enrollments of universities and colleges citywide and students' growing desire to live in residence halls.

Just about every major university in the city seems to be increasing their ranks of students in the coming years, responding to an increased demand by prospective students to live in New York City. Fordham University is seeking to grow the population at its Lincoln Center campus by 2,500, to 10,500; New York University's long-term plan calls for 1,000 new students locally; and the City University of New York has reported record high enrollments for the past eight years and now claims 230,000 students citywide.

"The decline of crime made the city available to everybody again," a professor at Cooper Union, Fred Siegel, said. With a safer image nationally, coupled with what Mr. Siegel calls a host of "aggressive, effective presidents" of universities, the city is increasingly becoming a college town, he said.

The New York State Education Department reports that more than 475,000 full- and part-time students receiving school credits were enrolled at colleges and universities in the five boroughs last fall, up from 417,000 in 2000.

While dormitory housing is expensive — two semesters at Pace University's new downtown dormitory cost about $15,000, according to the university — a tight rental market and a greater interest in living in a controlled college environment are heightening the demand for campus housing.

With the price of new buildings at an all-time high, many are turning to space that can be leased, either through Educational Housing Services or independently, a financial decision that requires a much smaller initial investment.

"The market and demand for student housing continues to grow, and our enrollment was growing," a vice president at Pace University, Rick Whitfield, said of the school's decision to lease the new downtown space with Educational Housing Services. "It's a matter of debt capacity and financial resources, and for us, the economics worked for us to lease versus buy."