A silent transformation is underway in Madison.
The city’s skyline, dominated by the Capitol, now shares its grandeur with residential high-rises.
Madison is undergoing a metamorphosis as the rise of corporate landlords reshape the city's student housing market and define the city’s modern identity. Over the years, Madison has become home to larger properties, including the Lux (completed in 2016), Grand Central (completed in 2009), and the Equinox (completed in 2005).
Owners of Madison’s largest towers often hail from other states — or, in some cases, other countries.
Dwell Student, a Singapore-based multinational real estate company, owns two properties in Madison, The Statesider and The Towers on State. Chicago-based developer Scion Group also owns two properties, Lark at Kohl and Lark at Randall.
The James, completed in 2017, is owned by Texas-based American Campus Communities. Its builder, Chicago-based developer Core Spaces, which currently owns HUB, is finishing construction on 386-unit Oliv Madison and recently got approval for its upcoming “Johnson and Bassett” project.
Oliv will welcome its first residents in fall of 2024, and Johnson and Bassett is expected to be completed by 2026.
“We chose to be in Madison to help address the rising demand for quality student housing close to campus and we are dedicated to ensuring that our residents have the best experience at The James,” American Campus Communities told The Daily Cardinal.
And with the announcement of several new housing projects from similar corporations, the corporate-dominated housing environment is likely here to stay.
Madison's evolving rental landscape is not just a matter of bricks and mortar. The transformation comes amid a housing affordability crisis.
Madison's rental prices have soared at a record pace, A national study from Apartment List found rent prices in Madison have jumped 14.1% over the past year and 30.4% since March 2020 — the fastest-rising rent among major U.S. cities.
“The demand is strong, and the supply seems to be limited. I've been a landlord on campus since 2002, and it seems like every year I get phone calls and emails earlier and earlier from tenants looking to lease places," said Todd Meinholz, owner of Madison Campus Rentals (MCR), a smaller rental company with five houses across Madison. “I'm sure it's a product of [the] shortage of units near campus.”
Meinholz, like other Madison-based landlords, is at the forefront of a Madison housing surge that continues to grow as University of Wisconsin-Madison enrollment breaks records.
However, Meinholz said his company isn’t in “direct competition” with corporate landlords.
“I’ve obviously seen what's going on with some of the developments, but that's not really my business focus. My properties are generally older homes that were built 100 years ago that had been student rentals for some time,” Meinholz said. “I don't really feel like my product is in direct competition with the newer buildings.“
The rising costs associated with housing and new developments are aided by Madison’s development rules, which don’t allow city officials to consider affordability as part of its approval process.
“The approval process is not necessarily becoming more expensive,” Madison District 8 Ald. MGR Govindarajan told The Daily Cardinal. “Rather, developers who are newer to the city are adjusting to a process that is different than what they work with in other jurisdictions, and are often less inclined to adjust to recommendations made by the process.”
Meinholz shared the hurdles he saw in the construction process: high construction costs, soaring interest rates, expensive insurance and steep land prices and taxes.
“It's not cheap to navigate,” Meinholz said. “There's a lot of folks that have a say in projects. It’s gotta be a pretty good project to get built.”
As approval and construction become costlier, only those with substantial capital can undertake the costs behind large developments, Govindarajan said.
“What we're seeing is that it's getting harder and harder for local developers to keep up with the rising costs of building apartments,” Govindarajan said. “With the rising costs of building materials, land value and construction costs, you end up seeing more national corporations getting into the game.”
This rise of corporate landlords in Madison is not an isolated phenomenon.
Nationwide, corporate landlords are increasingly dominating the rental market. In Los Angeles, more than two-thirds of all rental housing is owned by corporations, according to a report from nonprofit Strategic Actions for a Just Economy.
Verve — a project set to begin leasing in fall of 2024 — is owned by Subtext Living. The St. Louis-based company owns seven other properties with the same name near college campuses nationwide, including Purdue University, Ohio State University and Rutgers University.
In Madison, one thing is clear: corporate landlords have etched their mark on the city's skyline.
“The city of Madison approves what they approve, they deny what they deny. The neighborhoods have their own opinions and everybody gets their say, and I think that's wonderful,” Meinholz said. “I don't have an opinion one way or another. I think different options make a market better.”
Jasper Bernstein is the Associate News Editor for The Daily Cardinal. Follow him on Twitter at @jasperberns.