ASK THE CITIZENS of Philadelphia to pinpoint the movers and shakers behind University City’s renaissance in the past decade — a renaissance that’s seen houses refurbished and restaurants opened, an elementary school built and real live families moving in, and home prices that jumped from an average of $70,000 to more than $300,000 — and you’re likely to hear three names right off the bat: former Penn president Judy Rodin, her former vice president, John Fry, and planning visionary Omar Blaik.
Today, though, the man who’s been as much a part of the revival as any of them is sitting inside his windowless office at 41st and Walnut. Construction din from a workshop behind his office seeps through the adjoining wall. Behind the desk hangs, not a Rembrandt, but a loud Perry Milou painting of West Philly. Next-door neighbors? The brothers of Penn’s Alpha Epsilon Pi. Sometimes on early mornings, you get to see the walks of shame from the frat house.
But don’t let the just-average offices fool you: David Adelman, president and CEO of Campus Apartments, knows something about real estate. In fact, a dozen years after he and Penn began their West Philly experiment — partnering to give kids decent places to live — Campus Apartments is now the largest student housing provider in the City of Philadelphia, with a footprint of about two million square feet. And with properties in 50 other college towns around the country, Campus has become the largest privately owned student housing company in the nation.
“Schools have three problems: They don’t have enough housing, the housing they have is obsolete, and they just don’t know how to think about real estate properly,” says Adelman. “Student housing is a niche, and it takes a special concentration to do it.”
How did Adelman, who’s still just 36, do it? Through a combination of being in the right place at the right time, and understanding the market. In the case of student housing, the market is really about parents, who are generally footing the bill. A decade ago, all parents wanted was someplace clean and free of rats. Today, a new generation of parents intent on pampering their kids is looking for luxe places filled with high-speed Internet access, intercom systems, Xbox rooms and gyms — and Adelman is providing them. The man who helped revolutionize University City is rewriting the blueprints for student housing at campuses across the country.
IT’S A PLEASANT afternoon for a stroll through West Philly. Not 10 feet from the Campus Apartments office, Adelman begins, “See those buildings?” He points to a nearby Sansom Street strip of almost two dozen houses. All have the company’s signature facade — a coat of beige paint and a front door “Campus Apartments” plaque — except for two units covered in chipped maroon paint. “Those two buildings aren’t ours,” says Adelman, frowning. “We offered to paint them for free, just to clean them up, to make the street look nicer, but the landlords said no.”
We turn left. Adelman walks quickly, the tail of his dark overcoat not quite catching up with his calves. He’s a stocky five-foot-10, but moves with fluidity; a yoga instructor visits his Haverford house twice a week to work on his “flexibility.” On one hand, his dark hair proves a complimentary juxtaposition to his blue eyes. On the other hand, that same thick hair is moussed back into the beginning stages of a mullet.
He talks quickly, pointing out each of his units as we walk by, like a proud dad. I can’t keep up. “Which one’s your favorite?” I ask. “That’s like asking me about my favorite kid,” replies Adelman, who’s got housing of every kind: mid-rise buildings, brownstones, townhouses, garden-style apartments. We duck into his new and swanky 4200 Pine condos, built with Penn’s faculty and graduate students in mind, where the only remaining vacancy is a $745,000 unit. Adelman simultaneously inspects, guides and micromanages. “Why aren’t the smoke detector covers up yet?” he demands of Nick Zaferes, the V.P. of development and construction. He surveys another room. “Where’s that piece of trim?”
When it’s time to go, Adelman’s driver — “Uncle Frank” to Adelman’s two young daughters — picks us up in a Suburban, offering Fiji water bottles and some Trident gum, which Frank buys in bulk at BJ’s. There are at least a dozen packs sitting in the backseat console, in four different flavors; Adelman is addicted to hydrating and, apparently, fresh breath. As Uncle Frank circumnavigates the campus, Adelman continues to show me his properties. It would be easier for him to point out what he doesn’t own.
We get dropped off at the Campus Apartments accounting office, just across the street from his digs next to the frat boys. “You should have seen this building before we moved in. There were chalk outlines on the floor,” he says wryly, holding the door open for me. “All these things started happening, a momentum built, and people started caring. It was great, because we weren’t the only ones pulling the oar.”
ADELMAN MAJORED IN finance and political science at Ohio State, but he knew a thing or two about real estate. Growing up on the Main Line, he spent his summers, not at the sleep-away camps his friends went to, but working alongside longtime family friend Alan Horwitz, founder and chairman of Campus Apartments. Horwitz bought properties from families in West Philly, fixed them up, and rented them out to area students. “During those days, properties were available all over the place,” says Horwitz. “There was no competition — people didn’t want to deal with student housing.”
Adelman — who says he’s as close to 64-year-old Horwitz as to his own father — soon parlayed sweeping sawdust into learning about leases and renovating old buildings. A quick study, he invested his $2,000 bar mitzvah money in one of Horwitz’s properties at 45th and Pine. Eventually, Adelman knew enough about proper housing that in his senior year at OSU, when a slumlord ignored his request to add electrical outlets to his off-campus house, he marched to Columbus’s building codes office and returned with warnings of violation papers. (He got the outlets.) This passion for properties — and an anal retentiveness for accountability — explains why Adelman deferred Temple Law School and instead opted for the Campus Apartments offices at 41st and Walnut on his first day in the Real World.
At the time, the neighborhood didn’t look like much. “University City in 1996? Not a great situation,” says Penn’s then-executive vice president, John Fry, now president of Franklin & Marshall College. “A lot of people were in ‘Let’s just put up a fence around the campus’ mode.” Not only was Penn’s main drag replete with parking lots and depressing buildings, but students were paranoid and afraid to leave campus. Penn president Judy Rodin was intent on changing that, and she and her team crafted a list of what they’d need to stabilize and develop the neighborhood: cleanliness and safety, adequate housing, decent public schools, retail amenities and jobs. Penn required some outside help with the “decent housing” part.
“We were trying to get order out of chaos. Once we got stability on the ground, housing was next,” says Fry. But when he approached local landlords in hopes of partnering toward better, safer student housing — asking for proper maintenance, lighting, sidewalks and security — he was turned down again and again. The lone exception was Adelman, likely because Campus Apartments was already headed in that direction.
“We were concerned about lighting and safety even before Penn was on board,” Adelman says. “In the ’90s, there were murders and stabbings. University City was really bad news. They used to call the McDonald’s there ‘McDeath.’” Horwitz had taught Adelman that their tenants were somebody’s children, and they had a responsibility to take care of them, whether that meant adequate maintenance, proper lighting or paved sidewalks.
Plus, here was a business opportunity.
The dynamic in a nutshell: Campus Apartments works with the university to rehab off-campus homes for students and faculty. Campus owns two-thirds of the properties; Penn owns the rest. Either way, tenants pay their landlord, Campus Apartments. “Universities should build classrooms, build bio-tech centers, things like that,” Adelman says. “Let us focus on the residential.”
The leasing love affair between Penn and Campus Apartments is still hot and heavy. Today, Campus Apartments owns and operates approximately 165 off-campus properties near Penn, and manages another 70. “We’re talking over 200 properties that we’ve spent millions of dollars on,” says Adelman.
“David was systematically going through the inventory,” says Fry, “buying small-to-medium-size apartment buildings, stabilizing student housing. He was always the gold standard in terms of how he fixed up his buildings and managed them. The buildings were coveted by Penn students.”
And if you build it — “it” being a clean, safe place to lay your head — they will come. Slowly but surely, the next thing built in the area was reassurance. “University City was always a place where Penn was, but now it’s a residential and to some extent commercial choice for people,” says lawyer Lenny Klehr, who has long represented Campus Apartments. “David took real estate that served a utilitarian purpose and, because of his ability and vision, improved its quality. He really became one of the forces in the transformation of University City.”
Over the past five years, Adelman has increased Campus’s revenue by a whopping 585 percent, largely by expanding the company concept to 50-plus colleges around the country, including Emory, LSU, the University of Arizona and Purdue. Though he and Horwitz share the profits, Adelman is taking the business to a level the company founder never imagined. “At my age, you want to slow down, not go the other way,” says Horwitz. “I’m so proud of him, watching him. It’s like having a courtside seat at a basketball game.”
The nationwide portfolio means Adelman’s suitcase works overtime these days, typically hitting pavement outside the state at least twice a week, sometimes visiting three cities in one day, with wheels worn gray and zippers opposing closure. Today, entering the Northeast Philadelphia airport, Adelman has successfully stuffed 10 pounds of crap into a five-pound bag: work papers, binders and folders, a stack of written Valentine’s Day cards, a Louisiana State University baseball hat, a camera, yesterday’s Wall Street Journal and Inquirer. (His refusal to throw out unread newspapers allows him to play catch-up during travel and vacations.) Adelman’s a half-hour late for a flight to Baton Rouge — to check up on his LSU properties — but the pilot patiently waits, then loads the suitcase on board. Just one of the luxuries when you fly chartered.
Adelman has a penchant for the finer things; a Land Rover and an Escalade sit in his driveway. He craves Napa trips and hosts wine-tastings at home with his buds. But he pays that hefty charter flying fee ($2,500 per hour) so he can spend less time away from Hallee, his wife of eight years, and their two girls. “It’s funny,” he says, “because two or three years ago, I became Chairman’s Preferred with US Airways, and I said, ‘Wow, isn’t this great?’ My wife looked at me and goes, ‘You think that’s great?’”
On the charter’s six-seaters, his suitcase is always within arm’s reach.
Before takeoff, Adelman sends a congratulatory e-mail to the CEO of a competitor who just bought out another company that provides student housing. “We do compete in a few markets,” he says complacently, “but there’s 5,000 schools out there, you know?”
He stretches his legs, crossing them on the opposite leather seat. He rips off a few e-mails and phone calls while his BlackBerry still has reception.
“It’s easy just to buy things,” he says in the air, showing me his latest LSU property rendering, pulled from his suitcase. “But actually executing a plan, now that’s something else.” He describes the new apartment complex he’s building in Baton Rouge, with retail stores on the bottom level. He puts the rendering away. “I’m too young to screw anyone over. Some people in the business don’t want to listen to anybody — they think there’s nothing left to be learned. I listen to people.”
The word he hears now from kids and their parents is “luxury.” Today’s overprotective, coddling moms and dads are most particular about where Johnny and Susie live during their collegiate days, which has ultimately raised the bar for universities to rethink their decades-old dorms and housing units.
So where the trials of “college housing” used to be a rite of passage, these days, if Susie wants a tanning bed in her apartment complex, Susie will bronze with the best of them. Or so Adelman quickly learned from conducting focus groups about what students consider “necessities” nowadays. By giving them what they want (media rooms, computer labs, lounges, gyms, etc.), he makes his complexes that much more appealing than the next guy’s.
This new housing trend — catering to a spoiled Generation Y, and its spoiling parents, nationwide — is working. Last year, Campus Apartments invested more than $400 million in new acquisitions and development on college campuses across the country. Over the next two years, Adelman projects $700 million in transactions. (Yes, cha-ching is right.)
Some of that dough was rolled into a new trend at Penn — “kiddie condos.” It’s exactly what it sounds like — parents buy condos for their kids. (Said kids summarily rent the extra rooms to friends.) “There are parents out there who say, ‘I don’t want to pay rent for three years. I want to buy something, but I don’t know the neighborhood,’” says Adelman. “Some people thought I was crazy, but I said, ‘Why don’t we do it?’”
IN THE COURSE of the flight, Adelman is quiet for about an hour while he reviews paperwork, stopping only to crack open a pack of Trident. He pops two pieces, then hands the pack to me. I take a piece, hand it back.
It’s an exhausting day of checking up on current apartment complexes. Adelman meets with his staff, giving the green light for, among other requests, pool cabanas and a movie projection screen. He also critiques: This room is too dark, let’s get a guy in here for pricing on lights. We need a painting or something for that space. Those apartment numbers don’t pop enough. What’s that storage unit doing in the back? We need to get rid of that.
On the flight home, he tells me, “They need to figure out how to get Internet on planes.” Not once does the self-proclaimed “King of the Power Nap” shut his eyes. Instead, he continues chatting about University City’s future, including Penn’s plans to develop property near the 30th Street post office. “The post office development is going to be huge,” he says, then trails off and looks out the window.
Eventually we begin to descend — 20,000 feet, 15,000 feet. When the city skyline and lights come into view below us, Adelman’s BlackBerry picks up a signal, and the phone calls ensue. “Yeah, I’m landing right now. Thank you for waiting. I can be there in 12, 15 minutes,” he tells his chiropractor. He checks his incoming voicemail and sends out a battery of texts.
Ever the businessman, he thanks me for coming, shakes my hand, and, at 7:30 p.m., races out the door.