When David Adelman was 11 years old, he used to play basketball with Alan Horowitz, a family friend and founder of student housing provider Campus Apartments.
One day, Adelman told Horowitz, “I bet I could beat you.” Horowitz responded, “I’m going to teach you about betting.”
While the younger Adelman’s reckless wager cost him his basketball that day, he soon became president and chief executive officer of Campus Apartments under Horowitz’s guidance.
Campus Apartments currently owns a portfolio of nearly $200 million of real estate comprising 145 properties across the country. It manages 67 properties in University City and West Philadelphia on behalf of Penn.
While it currently has a sustained collaboration both with Penn and West Philadelphia, some are asking — what’s next?
Campus looks west
Founded in 1958, the company started with humble beginnings.
Adelman explained that Horowitz had recognized a lucrative opportunity in student housing, and at age 17, had asked his mother to sign the deed to buy his first investment property.
When the company was founded, Adelman said, the University’s western boundary was drawn at 34th Street, so Horowitz started buying properties near 40th and 41st streets, where prices were cheaper and where mostly graduate and dental students lived.
In the early 1960s, however, Penn collaborated with the city to employ the idea of eminent domain — the power of a public entity to acquire private property for public use — in order to expand its campus further west.
As a result, Horowitz made a profit selling his West Philadelphia properties to the city, but more importantly, Adelman said, “the school converged to where he had his business.”
Over the next few decades, Campus Apartments developed housing “where parents would feel good about leaving their kids.”
It currently owns the bulk of its properties between Pine and Sansom streets from 40th to 45th streets.
Guy Laren, a local developer who has worked with Campus Apartments in the past, said the company found ways to innovate in the “sleepy business of student housing” by changing with the times.
He explained that, in the 1970s and ’80s , when student housing was “disfavored” in the world of real estate, Campus Apartments borrowed modern marketing techniques — branding a distinctive look for home exteriors and coining names for groups of properties such as “Beige Block” — to attract more business.
Dan DeRitis, who served as the company’s general manager from 1976 to 1997, recalls that unlike other student housing providers in the 1980s, Campus Apartments invested in more “student-comfort” features on and around its properties, including outdoor porches and a shuttle bus system.
The developer next door
The company has spent thousands of dollars repairing sidewalks, renovating old retaining walls to prevent erosion, painting houses and cleaning rooms in an effort to spruce up the neighborhood.
In addition, many of the homes that line the 4000 block of Sansom Street — most of which the company owns — had been “dilapidated” when Adelman purchased them.
Adelman believes that, by his company’s example, neighboring landlords are also renovating their properties.
“I would love to see the tide rise among some of the other landlords,” he said. “I’m not worried about competition, I’m not worried about leasing up — I’m worried about maintaining value and doing the right thing.”
Residents of Spruce Hill — a neighborhood enclosed by Woodland Avenue and 40th, 46th and Market streets — have maintained a relatively productive relationship with Campus Apartments.
Barry Grossbach, the Spruce Hill Community Association’s zoning committee chair, believes whenever a single developer owns so much property in a neighborhood, residents worry what will happen when those properties “change hands.”
Many of the properties that the company has purchased, Grossbach explained, were formerly owned by absentee landlords who had little communication with neighborhood leaders and residents and would often let their houses fall into disrepair.
When these landlords dropped these properties — for either legal or financial reasons — Campus Apartments bought them up in large numbers.
Grossbach admits that the company has been a “tremendous asset” to University City and predicts that if the company’s portfolio fell back into the hands of absentee landlords, “you would see a major deterioration.”
Grossbach recalled Adelman once saying to him, “You better pray I don’t get hit by a bus.” Grossbach does say a little prayer for Adelman’s health every night.
In addition, Grossbach noted that Campus Apartments’ growing portfolio puts it in a position to affect homeownership rates in the neighborhood.
When a private developer manages so many houses in a single neighborhood — most of which are rented out to several tenants and thus not sold to single families — homeownership rates can drop.
Steve Herman of University Enterprises said the effect of student housing providers — including his company and Campus Apartments — on homeownership rates has changed throughout their companies’ histories.
Herman explained that when both companies were starting out, they could purchase single-family homes in large numbers since “homeowners were anxious to move to a new location. They didn’t want to be in the middle of the University.”
Now, he added, new developers coming into West Philadelphia are looking for abandoned warehouses and churches, leaving more single-family homes on the market.
Though there are still houses on the market, homeownership rates remain low. As of 2010, the homeownership rate in Spruce Hill was less than 18 percent. Grossbach has previously discussed with Adelman putting some of his larger single-family homes on the market to increase this figure. So far, he said, this hasn’t happened.
However, both the SHCA and Campus Apartments agree that their relationship has been consistent in addressing the neighborhood’s needs. Despite their occasional differences over paint jobs and window fixings, Adelman describes his company’s relationship with Spruce Hill as “fantastic.”
A waiter for universities
Besides its holdings in University City — including the $50 million Homewood Suites hotel on 41st and Walnut streets that opened in May — Campus Apartments has developed housing and retail for universities across the country.
Adelman said the company is now the largest off-campus housing provider for Louisiana State University. It also built a new on-campus graduate student housing complex for Emory University in 2009. In Pennsylvania, it has built undergraduate residence halls at Saint Joseph’s and Shippensburg universities.
The company’s national expansion points to Adelman’s key belief about the private developer’s relationship with universities.
“Schools are in the education business, not the real estate business,” he said. Just as universities outsource food providers, they can profit academically and financially by delegating off-campus development to an outside firm.
More recently, the company has set its sights on international growth as well.
In 2006, in lieu of making the company public, Adelman and his team began a $1.1 billion venture with GIC Real Estate — the real estate investment arm of the Government of Singapore.
Since then, Adelman said, Campus Apartments has spent time looking for projects and consulting jobs in Canada and Australia.
“I look at ourselves as a waiter — different universities have different needs, and I want to take their order,” he added.Comments powered by Disqus
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