Research: MF Development Has Bigger Impact on Schools Than Believed

NEWARK, NJ—Municipalities may need to increase their expectations of how new multifamily construction will affect their schools, and probably should stop using a “one size fits all” model in determining the impact of multifamily construction on local school capacity, according to research released by The Center for Real Estate at Rutgers Business School.

The Center has released its first public policy white paper, “School-Age Children in Rental Units in New Jersey: Results from a Survey of Developers and Property Managers.”

PODCAST INTERVIEW

You can listen to an audio conversation with Prof. Morris Davis of the Rutgers Center for Real Estate and Debra Tantleff, president of Tantum Real Estate and a member of the Center’s executive committee, in the player below. If you do not see a player, you can click here to listen to the podcast.

In what is being called the first comprehensive, data-based research to determine the impact of multifamily developments on New Jersey school capacity needs, Rutgers conducted a comprehensive survey of New Jersey real estate owners and property managers of multifamily rental buildings.

“The issue of school-age children in new multifamily development is frequently a contentious debate, and one that can benefit immensely from robust, hard data that takes into account a multitude of variables,” said Professor Morris A. Davis, Paul V. Profeta chair of real estate and academic director of the Rutgers Center for Real Estate. “This research is emblematic of the Center’s mission as a whole, as we’ve interfaced closely with leading practitioners from the commercial real estate industry to uncover new academic insights with real practical applications.”

The study found a strong relationship between the number of school-age children in rental developments and a range of other key factors, including renters’ household income, product density and the age of the building. High-rise multifamily buildings tend to generate less demand for school capacity because less families with school-age children appear to rent in them, the study suggests.

The comprehensive study was conducted over an intensive 18-month period and surveyed a diverse array of more than 40,000 residential units in New Jersey. The study provides an unprecedented level of context for the oft-contested issue of the effects of development on generating school-age children by controlling for a number of important variables, including: household income; whether the units were market rate or designated affordable housing; the number of bedrooms in each unit; and building type and age.

As developers and municipalities assess new multifamily developments and the potential impact to local schools, the study provides critical data to better inform decision-making for the public and private sectors alike. Some of the findings include:

1. Across all income levels and building product types the number of school-age children increases with the number of bedrooms;
2. For any given number of bedrooms and product types, the number of school-age children decreases as renters’ household incomes rise;
3. Holding income and the number of bedrooms fixed, the amount of school-age children has an inverse relationship with density (e.g. garden apartments, with fewer units per building, have a greater number of school-age children, and mid-and-high-rise buildings with a greater number of units per building have a lesser number of school-age children);
4. Buildings with an average income of less than $50,000 per year have a similar number of school-age children regardless of whether the buildings include affordable units or market-rate units;
5. Buildings constructed before 2000 have a significantly higher number of school-age children living in market-rate units than do buildings built after 2000; and
6. On average, the number of school-age children per 100 affordable units is significantly higher than the number of school-age children per 100 market-rate units.

The study was completed by an academic and industry team led by Davis.

Collaborating on the paper were the Center’s Executive Committee members Deborah Tantleff, founder and president of Tantum Real Estate; Ron Ladell, senior vice president of AvalonBay Communities; and Professor David Frame, PhD, director of curriculum for the Rutgers Center for Real Estate.

“Because of the Center’s illuminating research, we no longer need to have discussions about the impact of school-age children from new development in theoretical or abstract terms,” says Ladell. “This comprehensive study will serve as a planning tool for developers, while empowering and educating municipalities to make smart development policy. It’s a true victory for the private and public sectors alike.”

“This now becomes a tool for municipal planners to educate their administration and community outreach as to the realities of the marketplace,” says Tantleff. “It is a tool that’s available to the development community to allow the development community to present their fiscal impact, their analysis and their impact studies. The beauty of this is coming through an objective institution like Rutgers. This allows both sides of the table to use the tool to get to the end. This data now shows holistic trends, county trends, and it objectifies the conversation, where a developer can respect and appreciate the unique local nature of a local municipality, but have a more objective holistic conversation.”

The Center’s study incorporated 251 surveys, representing more than 40,000 market-rate units and 4,000 affordable units. The sample size included 3.5 percent of all rental units in New Jersey.

The complete study (PDF file) can be downloaded at the following link: https://www.rutgersrealestate.com/publications/white-papers/school-age-children-study/

The Rutgers Center for Real Estate, now beginning its fourth year of operation, provides real estate education and scholarships to students at both the Newark and New Brunswick campuses. The Center enjoys the support of the industry with a 60-plus-person advisory board and 25-plus-person Emerging Leaders Council, whose generosity enabled the Center to award nearly $250,000 in scholarships since its inception.