Management 101 The rest of Capstone’s revenue comes from management of student housing. As with development, the company started its management operations off-campus with projects at Tallahassee, Fla., and Starkville, Miss., in 1991.
While managing student apartments is similar to managing market-rate developments, there are differences, especially for Capstone-managed properties. They start with the number of leases and continue with the speed in turnover units. Capstone, unlike other apartment owners and managers that simply lease market-rate units to students, requires parents sign for their child’s lease, which covers only their “bed,” not the full apartment. (The other student residents in an apartment must have their parents’ signatures as well.) This protects both parents and Capstone. In a normal leasing situation, “the students and their parents are responsible for the cost of the entire apartment,” Mouron says. “If my child’s three roommates flunked out, I would be responsible for the entire lease. Since we [at Capstone] were getting parental guarantees [for each bed, rather than the full unit], we needed individual leases.”
In a property with 500 leases, the leasing manager could be working with as many as 2,000 leases and just as many sets of anxious parents. In addition, student housing has short turnover periods. All the leases in a building expire on the same day at the end of the school year. Then property managers must turn each unit around, having it cleaned, painted, and repaired within weeks.
The pressures ratchet higher with on-campus housing because Capstone property managers must work in concert with colleges. With state budget crunches, colleges and universities have begun outsourcing property management. This trend started slowly in the late 1990s and is now taking off. Some schools, such as the City University of New York, even partnered with Capstone to start housing programs on their campuses.
Mouron likes to compare the schools Capstone serves to students going through a college cafeteria. Much like a student deciding whether to have a hamburger or pizza or both, colleges can decide whether they want Capstone to handle their maintenance or housing assignments or both. The company’s services also include handling meal plans, leasing student units, managing buildings, and assisting in residence life.
This forces Capstone managers to be fully integrated with the colleges and universities. Many times they are so good at doing so, students find it hard to distinguish between Capstone employees and college personnel. “It’s very encompassing,” says Doug Brown, a former college administrator and president of Capstone On-Campus Management, the on-campus management arm of the company. “In order for us to be successful in asset management, we have to be one with them.”
At the University of Maryland, for instance, Capstone handles leasing, roommate assignment, collection of rents, and normal maintenance functions. Capstone’s integration is so complete that its employees wear University of Maryland staff shirts at resident hall barbecues and help set up employment fairs. “They have shown initiative,” says Jeanne Steffes, director of the Beyond the Classroom Living and Learning program, which helps prepare juniors and seniors at Maryland for life after college. “That is something few and far between with contractors. I look at them as our partners.”
Capstone realizes the importance of this partnership, so it recruits former resident assistants and student government leaders to manage properties. “We want people who have an understanding of students and how universities work,” Brown says.
