Five years ago, George Alva, a former private equity investor in the corporate world, opened the doors of his student housing company, Unica Properties, now Mosaic Student Communities. Expanding from a few properties near Berkley and Cal Poly, Mosaic is now a growing competitor in USC-area market, against other more established companies such as StuHo and North University Park Properties (NUPP). Although starting fresh in a neighborhood with a plethora of student housing companies, Alva hopes to attract students through a slightly different type of business plan.
“I enjoy serving the student community, and I’ve really enjoyed the results from renovating these old, beat-up homes and bringing them back to life for people to enjoy once again. We think most of USC student housing providers have terrible to mediocre customer service and property management. We intend to set a new standard in the neighborhood.” Mosaic markets itself by appealing to specific groups of students, like sports teams, film students, or clubs. They hope by doing so, they can draw more community-oriented groups of students away from other, less personal housing companies (the aforementioned StuHo).
“Student real estate is more restrictive than other kinds of real estate because you can only buy property around university campuses, which narrows your target market,” Alva admits. “It’s very management-intensive, because every year you need to lease out all of your units again, while dealing with inspections, repairs, and prepping for new tenants.” However, there are benefits to a student market. “Real estate is cyclical in general, but student housing is insulated from that cycle because there are always going to be an influx of students.”
One only has to look around the USC/West Adams area to guess that the financial crisis would affect local homeowners and neighborhoods. However, for Alva, “[t]he housing crisis was the best thing that happened to my business, as I started buying properties in this area at very low prices.” For a housing company it’s acquire or be acquired. “NUPP had to sell six properties during the crisis, and have been left in a worse off position than companies that were able to purchase properties instead.” Those who can’t acquire are left behind. Not wanting to sound cold, Alva states it was just the “right place at the right time”, as his business arrived a year after the housing bubble burst, not to mention most of the properties bought were “almost abandoned and in really bad shape…a lot of people wanted to sell.” And unlike StuHo, who usually tear the original properties down to build new, larger units on top, Mosaic keeps more than the foundations of these sometimes historic houses in an effort to truly revitalize the past.
Perhaps surprisingly, the USC student housing market has only grown in the last five years. With the arrival of huge, luxury complexes such as Icon Plaza, Gateway, Tuscany, and the Lorenzo, “the USC area has become a much more desirable place to be.” Instead of fearing these monstrously big developments, Alva welcomes them. “Despite the increased supply, when, theoretically, prices should go down, these new developments are bringing more and more students back to the USC area.” Alva’s desired customer base also differs from students who would move into such complexes. “We cater to larger groups of students, groups of friends usually, who want to live in a house together.” In other words, Mosaic is a different type of honey, attracting a different flock of bees.
That’s not to say Alva disregards the growing USC real estate market. Alva brings up the future University Village/USC Village development. “The 1.1 billion dollar UV project starting in May will add 4000 units over 15 years.” Alva theorizes it will make the North University Park a more college-town-like environment. “Everyone will want to live around USC, students and young alumni alike. It’s becoming less of a commuter school than it was ten years ago…the more you have improvements from big developments, the more the tide rises. And rising tides lift all boats.” At least, it lifts the smart boats. Mosaic been forecasting the UV development, and is in the process of purchasing more houses in the North University Park area. The following map displays Mosaic’s current properties (marked with yellow houses), and the area where they hope to purchase and develop new properties (marked with the red circle) in response to the coming UV development (the blue mark in the lower right portion of the circle):
“The smart move is to grow into the North University area in order to meet the incoming business.” Alva hopes such planning will put the young Mosaic ahead of the “more aggressive, and deep-pocketed” StuHo. “The biggest challenge is finding new, well-priced properties. That’s what I worry about at night. The important question to never stop asking is: How are we going to keep growing?”