University explores selling Fayette Square Apartments.
The University of Maryland, Baltimore (UMB) entered into a ground lease with the Maryland Economic Development Corporation (MEDCO) in 2002 for the development and operation of the Fayette Square student housing development. The property is managed by Capstone on Campus Management, a third-party vendor that specializes in the management of student housing properties. The property had maintained an occupancy rate of approximately 90 percent since construction. However, the property suffered a near 50 percent vacancy at the height of the COVID-19 pandemic in 2020 and as of October 2022 had only returned to a post-pandemic occupancy high of 71 percent.
The property has been operating at a loss since the beginning of the 2020-2021 academic year and has become financially unpredictable for the University. In addition, to remain competitive with newer and more modern housing options in the area, the facility will require significant capital improvements in the upcoming years. For these reasons, UMB is making a strategic shift in operations and moving away from owning and/or operating campus housing. We want to allow experts in student housing who have more capital and operational experience to fulfill the ever-evolving housing needs for our UMB students.
To that end, we have designed a well-thought-out transition plan that will avoid disruption during any given semester. UMB has received Maryland State Clearinghouse approval to surplus the property and offer it for sale on the open market. The process will start with a competitive procurement to obtain the services of a broker to market the property. The reality is that any sale could take months or years.
Our interest and most likely that of any potential buyer would be to use the property as a continued yet more modern housing option for students. In the meantime, UMB remains committed to supporting the operations of Fayette Square and is working with MEDCO and Capstone on Campus Management to improve the occupancy and continue to make capital improvements until such time that the sale of Fayette Square would take place. UMB will insist that current occupants for the 2022-2023 academic year as well as anyone renewing or new occupants for the 2023-2024 academic year not be impacted by the potential sale of the facility. This may need to be extended to future academic years depending on the timing of the potential sale of the property.
In keeping with UMB's core values of Respect and Integrity, we will be transparent and keep affected students and staff informed of activities and timelines. We will work with any future buyer of the property to provide residents with as much advance notice as possible. Soon after a buyer is identified, we will communicate the timeline when housing licenses will no longer be accepted from current or prospective residents.
At this time, the University will continue to operate Pascault Row. An update will be provided in the future regarding any impacts to Pascault Row.