When an Alabama developer built the labyrinthine 13th & Olive student housing complex in Eugene a decade ago, the place quickly became the butt of jibes. The community did not warmly welcome the first super-sized privately owned student housing complex to be built here.
Noise from construction work on the five-story complex drew complaints. When unveiled, the facade proved a stark, bland disappointment. Weather took a toll on the cement siding panels, some of which cracked and are now patched with caulk.
And in the ensuing years, other developers built snazzier student high-rises much closer to the University of Oregon — 13th & Olive is 10 blocks from the UO’s western edge.
All of this spelled opportunity for a New York-based investment group that buys and spiffs up student housing around the country.
On Feb. 19, the firm, Timberline Real Estate Ventures, headquartered in Rye, north of New York City, bought 13th & Olive for $73.4 million, according to the deed. That’s a steep discount from the construction cost of $90 million, and the $104 million the complex traded hands for in 2016 to the NYC-based investment group that sold it to Timberline.
“We are always looking for interesting opportunities,” says Nathan Fowler, a founding principal at Timberline. His group had scoured the UO and Oregon State University markets, he says. “We are very bullish on both universities,” he tells Eugene Weekly.
“We look for assets that need TLC, and we are putting in some dollars to refresh” 13th & Olive, he says.
Bigger units
Timberline will spend an undisclosed amount painting the exterior and replacing damaged cement siding panels, says Andrew Stark, also a founding principal at Timberline.
But mostly, Stark and Fowler say, they will market the complex’s assets: Apartments that are larger than units in rival new high-rises near campus; rents that are lower; and ample on-site parking. The complex has 1,004 parking spaces in two massive parking garages.
Current Eugene residents, jaded by the ceaseless apartment construction in the city in recent years, might be surprised at the controversy that erupted when Alabama-based Capstone Collegiate Communities bought an old, largely vacant medical clinic building, tore it down and put up the 1,300-bedroom 13th & Olive. Before construction, the Eugene City Council awarded the developer a 10-year property tax exemption on the buildings. But local officials were dismayed when the drab, monotonous exterior didn’t live up to fancy architectural drawings, and Capstone failed to create 5,000 square feet of ground-floor retail space it had vaguely promised. Dismayed, city leaders froze the tax-exemption program and then rewrote it to bar new student housing complexes.
Tax waiver valuable
But the Capstone waiver, which runs with the property, remained in place. Last November’s tax bill was the final exemption year for the buildings, says Tara Smith, Lane County’s appraisal manager.
Under the program, the owner always paid property taxes on the land — about $187,000 last year. But taxes on the buildings — about $1 million a year — were waived. Those kick in this year.
Timberline owns student and multi-family rental complexes around the country. It has 40,000 student bedrooms, says Fowler.
In Eugene, “the newer (student housing) properties have rental rates that are pretty high,” he says. At 13th & Olive, a four-bedroom, four-bathroom apartment starts at $625 per person, while rivals can cost around $1,000 per person, he says.
Fowler won’t disclose the vacancy rate at 13th & Olive. But he says he wants to bring it down to the market average of 5-7 percent for student housing.
Bricks $ Mortar is a column anchored by Christian Wihtol, who worked as an editor and writer at The Register-Guard in Eugene 1990-2018, much of the time focused on real estate, economic development and business. Reach him at Christian@EugeneWeekly.com.