EAST LANSING — Three weeks after leasing began, The Hub at East Lansing had already raised its prices twice.

Because it could. Demand had been that strong.

The 10-story student apartment building is still under construction on the eastern edge of downtown. It has just one exterior wall, but it's a stone's throw away from Michigan State University's campus. Students are already certain they want to live there.

So certain that, when the leasing office hosted an open house on a Wednesday in mid-September, few students actually showed up to tour the small mock apartment set up for the occasion.

They called instead, and let agents walk them through the leasing process for a building that doesn't open until August. The spread of cupcakes, soda and barbecue sandwiches went almost untouched.

The Hub is one of three high-rise apartment projects greenlit by the East Lansing City Council since October of last year, all of them adjacent to Michigan State University on Grand River Avenue.

Together, they'll add 930 apartments and 867 parking spaces to downtown East Lansing, more than three quarters of those within the next year.

How it could impact the rental market

And, if interest in the Hub is any indication, they'll create a ripple effect in a rental market that has been tightening for a decade.

“Competition creates better housing opportunities,” East Lansing Mayor Mark Meadows said. "I see this as a positive impact."

With all of the projects slated to be 10 stories or higher, the influx of development will give East Lansing a more urban feel, he said. It will help diversify the city's housing supply and probably leave "less room for sandwich shops and T-shirt sellers."

And the addition of close to 1,000 new apartments could push other rental property owners into fixing up their spaces, he said.

It equally well could make it harder for other property owners to find tenants and encourage some to drop rent prices to stay competitive or to invest less in upkeep.

But more housing is needed, said Sarah Beltran, a Michigan State senior, because the search for it is hectic and competitive.

"I would start looking for housing in September or October the school year prior to moving in," she said. "The more housing, the better."

'A big city feel'

East Lansing is actually behind many large university towns in terms of student-focused development. Student housing development has boomed near college campuses across the country in recent years.

Nationwide, investors spent about $3 billion on student housing in 2014. By 2016, the investment had tripled, said Jaclyn Fitts, the director of national student housing for CBRE, a commercial real estate services and investment firm.

Investors are interested in student housing because it’s a good way to diversify their portfolios. Student housing is also relatively recession-proof, Fitts said. Enrollment in universities typically spikes during difficult economic times.

After a nationwide boom in recent years, Fitts said the market is stabilizing primarily because there's only so much space around universities that can be redeveloped.

“The land becomes harder to find when you’re looking at only properties that are within walking distance to a campus," she said.

But the developers behind these three projects have found it.

The Hub at East Lansing will sit near East Grand River Avenue and Cedar Street and will have 347 apartments ranging from studios to three-bedroom units.

The Center City District project calls for a 12-story apartment building targeted toward students and young professionals on the 100 block of East Grand River, with a small-scale Target on the first floor. The project also includes a second, 10-story building with a parking deck and an apartment complex for people 55 or older.

And Chicago-based DRW/Convexity plans to build an 11-story, 140-foot tall mixed-use apartment building at the long blighted corner of Abbot Road and Grand River Avenue and an adjacent 10-story, 119.5-foot tall Graduate Hotel.

“Downtown is going to have a much more big city feel to it,” City Council Member Shanna Draheim said. “More importantly by adding the people living down here it creates more street life, more people on the sidewalks, more activity so that’s going to be good for businesses down here now.”

More space for MSU student population

And it opens up space for MSU's growing student population, which eclipsed 50,000 students in 2014. This year's freshman class is its largest ever with more than 8,400 students.

Senior Austin Czyzewski was surprised at how limited the housing supply was when he started looking late last fall. He and his roommates ultimately signed at The Village of Chandler Crossings, a 16-year-old development three miles north of campus.

Czyzewski said he's happy with how much he pays in rent and the apartment itself but would have preferred to be closer to campus.

"I'd like to not have to take the bus," he said. "I think it's definitely going to be a bit of a nuisance come winter."

The rental vacancy rate in the city has dropped steadily for a decade.

In 2010, East Lansing's vacancy rate was 8.4% with 15,629 housing units, according to Census data. As of 2016, it was 4.2%.

Across the tri-county area, the rental vacancy rate was estimated to be 6% as of Jan. 1, 2017, down from 9% in April 2010, according to a recent report from the U.S. Department of Housing and Urban Development.

But new developments have opened their doors since, including the nine-story SkyVue apartment complex on Michigan Avenue next to Frandor Shopping Center and the five-story 565 Building on Grand River Avenue downtown.

Some aren't so sure all the extra housing is needed.

“If you look around East Lansing there are apartments everywhere," said Richard Foster, an East Lansing lawyer and the owner of The Element 903, an apartment building across the street from the new Hub project. "Eventually, there’s not going to be any demand.”

Foster said he's not surprised by the interest in the Hub. Students are typically attracted to the newest housing option. He said it's too soon to tell whether the new development will make it more challenging to fill up his own 32-bedroom building.

The influx of development is going to bring "ramifications on some (property) owners," Foster said. "I don’t know who that will be.”

Representatives from DTN Management Co., Cron Management and Prime Housing Group, which are among the largest student housing management companies in the region, did not respond to interview requests for this story.

Lansing developer Pat Gillespie, who owns the Midtown apartment building along Michigan Avenue near campus, said he thinks development will make East Lansing more of a destination for people and will add some needed variety to the retail in the area.

He also said the increased competition might force property owners further away from the school to lower their prices.

That's not bad for tenants, all else being equal, but it's not good for landlords.

"No developer has a master plan that their rent will go down," he said. "It's not a planned activity. It's not something that they’re looking forward to.”

'Everybody wants the best apartment'

While students will likely make up a good portion of downtown's newest residents, there's one new project that's guaranteed to attract an older crowd.

The building along Albert Avenue in the Center City District project is specifically set aside for people 55 and older. The building that fronts on Grand River Avenue, branded the Landmark, is targeted toward students and young professionals.

Steve Willobee, the vice president of government affairs and public relations at Harbor Bay Real Estate, described it as multi-generational for people who "want to be downtown and have the opportunity to take an elevator down and go see a show."

The Hub and the Landmark are clearly meant for a younger crowd.

At both, rental rates are listed "per bed." Tenants sign individual leases. Both have designated study areas. The refrigerator at leasing office at the Hub is full of neat rows of Faygo and LaCroix, Skittles and freeze-dried apples.

MSU history junior Matt Farber stopped by the Hub's office on a recent afternoon to drop off leasing documents. He was drawn to the Hub because of the amenities but primarily because of its location right next to campus.

“Everybody wants the best apartment and location,” Farber said.

His future roommate Reid Kanter agreed. He said he was looking for an different experience from living in his fraternity house but still wanted to be close to campus.

“For me, location is pretty important,” he said. “I’d rather be close to campus and downtown and things to do.”

The leasing office on Grand River Avenue has custom art work that will one day hang in the completed building. There’s tennis ball art that makes up the building's logo. Another piece is composed of boxing gloves. There's a lamp made out of badminton birdies.

“We want to make it Instagrammable,” said Melissa Flath, the vice president of new business for Core Spaces, the Hub's developer.

The furnished apartments at the Hub come with Bluetooth shower speakers. There’s a pool and basketball court on the roof and a yoga studio with virtual lessons.

A 300-square-foot, one-bedroom unit with a Murphy bed is $1,100 per month. The lowest rate a student can pay is about $560 to share a room.

Rent at the Hub is somewhat higher than other properties close to campus on a per room basis and far higher per square foot.

At The Hub, a 683-square-foot, two-bedroom, two-bathroom apartment starts at $1,029 per bedroom. At the Landmark, a 768-square-foot, two-bedroom, two-bathroom apartment is $1,050 per bedroom.

By comparison, rent for a 1,200-square-foot, two-bedroom, two-bathroom apartment at the Element starts at about $900 per bedroom. A 654-square-foot, two-bedroom, one-bathroom apartment at Cedar Village is between $640 and $950 per person. A two-bedroom, two-bathroom apartment at The Village at Chandler Crossings starts at $629.

The median rent in East Lansing between 2012 and 2016 was $896, according to U.S. Census data.

Flath said students were previously overlooked by most developers despite the fact that they can have a serious impact on rental markets.

“They’re not kids to us,” she said. “They’re real customers.”

Impact on MSU

Currently, about 16,000 MSU students live in university housing. Most freshman students are required to do so for their first two semesters.

The school has had a policy since the '80s that requires sophomores to live on campus, but it's never been enforced, said Ray Gasser, director of residence education and housing services at MSU, but about 50 percent of sophomores still decide to live on campus.

That's partly because MSU compares reasonably well cost and convenience-wise to other housing options. This year, the standard rate for a spot in a double room is $10,272, or close to $1,250 a month.

It's partly the result of a $285 million effort by MSU to update its dorms and dining halls that began in 2007.

But none of those improvements involved Bluetooth speakers or rooftop basketball courts.

MSU junior Lammar Jones has lived on campus all three years. He said he likes that living in the dorms means he doesn't have to worry about meals or being late to class.

"I'm already on campus most of the day," he said. "It's more convenient."

Jones is interested in becoming a resident assistant his senior year. If that doesn't pan out, though, he said he'll probably move off campus. He's outgrown the dorms, he said, and is tired of sharing a room.

Gasser said he doesn’t think the new developments will impact the number of students who decide to live on campus. The dorms offer a different type of student living experience, he said, one where students are surrounded by resources from the school.

“We’re not going to suddenly put in pools or tanning beds,” Gasser said. “That’s not our space.”

Gasser expects the most impact from the development will likely be felt by property owners further away from campus.

While it's too soon to say what impact the new development in downtown East Lansing will have on vacancy rates, over saturation of a market can mean the property owners start making concessions like offering one month rent free, lowering rents or giving away gift cards or other prizes, said Heather Collin, the managing director of the Property Management Association of Mid Michigan.

“Like anything, when there's enough supply it benefits the consumer," she said. "Students have lots of options in East Lansing, and that's a good thing.”

Contact reporter Haley Hansen at (517) 267-1344 or hhansen@lsj.com. Follow her on Twitter @halehansen.