Ask Perplexity AI: What are the Risks to the Town of Continued Development of Five Story Private Dorms Downtown?
One East Pleasant Street. Photo: amherstma.gov
This is a new occasional column from Ira Bryck entitled “Ask Perplexity AI”. The columns will pose a question to Perplexity AI along with a collection of data and will explore the analysis that AI returns. Bryck understands that Artificial Intelligence is not Actual Intelligence, but it’s better than Real Stupid; and like life, it’s garbage in, garbage out. Read previous “Ask Perplexity AI” columns here.
The Question
Amherst, Massachusetts, a town of 20,000 permanent residents and 20,000 college students across three institutions (UMass Amherst, Hampshire College, and Amherst College), faces a critical development challenge. While developers continue to build five-story private dormitories downtown with reduced mixed-use requirements, higher education is approaching a “demographic cliff” due to declining birth rates and decreasing college enrollment, particularly among young men. This trend is expected to significantly impact both private colleges and state universities starting in 2025. Despite surrounding towns maintaining profitability with one – three story buildings, developers in Amherst insist on taller structures, citing higher costs in college towns. This raises concerns about the long-term viability of these private dormitory investments and the risk of Amherst becoming overly dependent on student housing, potentially compromising its character as a diverse, sustainable community. Discuss.
The Answer
The development of private dormitories in Amherst, MA, and the town’s support for five to six-story mixed-use projects face significant risks tied to the impending “enrollment cliff” and broader market trends. Below is an analysis of the likelihood of success for these projects and their long-term implications for the town.
Key Risks to Private Dormitory Demand
Demographic Decline
The U.S. college-age population is projected to drop by 15% between 2025 and 2029, with a steeper decline expected for private colleges and regional public institutions. Amherst’s mix of small private colleges (Hampshire, Amherst College) and UMass’s flagship campus creates vulnerability, as private institutions are already experiencing enrollment declines (e.g., Black freshman enrollment fell 18.7% nationally since 2020)
Young men are opting out of college at higher rates, exacerbating enrollment challenges
Shifting Student Preferences
Students increasingly prioritize privacy and amenities, with demand shifting toward single rooms and upgraded facilities. However, luxury private developments (e.g., pools, gyms) risk oversupply in markets like Amherst, where affordability is strained. At Purdue, private apartments with saunas and study rooms charge up to $1,956/month, raising concerns about socioeconomic divides.
Competition with Universities
UMass and other institutions may expand on-campus housing to retain students, as seen at Northeastern University and UMass Boston through public-private partnerships. If enrollment declines, universities could reduce off-campus housing reliance, leaving private developers with vacancies.
Financial Viability of Five to Six Story Projects
Profitability Pressures: Developers argue that taller buildings are necessary due to high land and construction costs in college towns. However:
Oversupply Risk: Amherst’s 20,000 students already face competition from both on-campus housing and existing private developments. A 2022 study found that private student housing occupancy rates are highly sensitive to enrollment fluctuations, with pre-pandemic vacancy rates nearing 10% in oversaturated markets
Affordable Housing Shortfalls: Mixed-use projects in Amherst often minimize commercial/affordable units (e.g., 1/3 of first-floor space excluding utilities). This risks alienating non-student residents, who comprise half the town’s population, and could spur backlash against “student-only” zoning.
Dangers of Over-Reliance on Student Housing
Economic Vulnerability
A student-centric housing market leaves Amherst exposed to enrollment declines. For example, Grand Canyon University’s legal battles over nonprofit status highlight the financial fragility of institutions reliant on tuition-dependent revenue. If colleges shrink or close, private dorms could become stranded assets.
Loss of Community Balance
Overdevelopment of student housing could erode Amherst’s appeal to non-student residents, who may flee rising rents and noise. Cities like West Lafayette, IN, have halted approvals for student-exclusive high-rises after public outcry over skewed development
Infrastructure Strain
Concentrated student housing strains municipal services (e.g., waste management, parking) without commensurate tax revenue, as students contribute less to local economies than year-round residents.
Recommendations for Amherst Planners
Demand Contingency Plans
Require developers to submit enrollment-impact studies tied to regional demographic trends and incorporate flexible designs (e.g., convertible units for non-student use).
Affordability Mandates
Strengthen mixed-use requirements to ensure projects include truly affordable units (e.g., 20% of units below market rate) and meaningful commercial space beyond token storefronts.
Partnerships with Universities
Explore public-private partnerships (e.g., UMass Boston’s dormitory deal with Capstone) to share financial risk and align housing development with institutional enrollment strategies.
Conclusion
Amherst’s current trajectory risks creating a housing market overly dependent on a shrinking student population, with luxury-focused private dorms likely to struggle post-2025. To avoid becoming “purpose-built” for students, the town should prioritize balanced development, affordability safeguards, and closer collaboration with universities to hedge against enrollment declines. Without these measures, Amherst could face vacancies, economic instability, and a loss of community character.
Ira, some interest things to think about. I wonder what would be the response if you asked what good things could happen?
As for development and the future, currently the cost to build to even break even is very difficult and likely to get worse with the tariffs variable. So like it or not going higher is the best way to help. The other would be forcing fewer affordable units. There is no magic bullet. The more likely scenario will be less new product.
The supply/demand equation and your “concern” of over supply is the way to bring rents down. Isnt this what everyone wants. ? If a developer over builds and runs into financial difficulty then they will pay the price. Someone will buy it cheaper and reset rents etc and move on.
I don’t see a reason to debate who or what our demographics are. We are maybe 50% students ? Even tho not year round. That doesn’t affect housing much. Most leases are for a year.
As you know demanding too much commercial space in new buildings only make the project riskier. I wish it didn’t because I’d like to see more. But If you were to build something and risk finances of your family I doubt you would gamble on commercial paying you rent vs almost any kind of housing.
I spoke with a landlord last week that said his commercial rents are less than 20 years ago. As I reviewed things in many cases I can say the same thing.
At some point I’d like to see you and others provide ideas that are fundamentally sound. Not just wishing.
It seems when someone does something , taking significant financial risk , all that happens is criticism.
I’m sure I’ll get blasted by many on this site but so be it. I enjoy reading some of what’s here. Some things are very frustrating when ppl with no knowledge or maybe worse , a little knowledge, try to be the author of ideas that have any reality.
So let’s end on something g we agree on. The Bank of America building isn’t the town’s best look.
Hi Curt,
Here are my responses to a few things you point out. We are friends, and I see this as a continuation of the discussion we have had ongoing for years. You will recall that I invited you to meet with a few year-round residents, for a neighborly exploration of ideas, and you liked several of the ideas.
Also, I hooked you up with an intern team of MBAs from Isenberg, to help you explore win/win ideas for your downtown real estate. Plus I presented you with surveys (admittedly I am not a professional pollster) that showed a decent amount of interest in 55+ housing downtown, and suggested to you many businesses that may be lured by you to open in Amherst, so to depict me and other Indy readers/writers as lacking in anything but criticism is untrue, as you know.
A few points you made, that I will respond to briefly:
you: If a developer over builds and runs into financial difficulty then they will pay the price. Someone will buy it cheaper and reset rents etc and move on
me: The private dorms are “purpose-built” for student housing, maybe build housing that is also appropriate for any next generation of use – a family is not going to want to live in the configurations now being offered
you: I don’t see a reason to debate who or what our demographics are. We are maybe 50% students? Even tho not year-round. That doesn’t affect housing much. Most leases are for a year.
me: Our demographics count a lot. We are building a new library and new elementary school, though our town is less and less attractive to families. Our house prices are jacked up because there is a market for speculators who do not care about neighborhoods or year-round economies or sustainable strategies.
you: As you know demanding too much commercial space in new buildings only make the project riskier. I wish it didn’t because I’d like to see more.
me: The town has watered down mixed use to “demand” that 1/3 of the ground floor (not counting mechanicals and common areas) be commercial. While seems like a huge hurdle for developers and the Planning Board and Planning Department, somehow the BID can simultaneously claim that downtown commercial spaces are 94% rented.
you: It seems when someone does something, taking significant financial risk, all that happens is criticism.
me: Or useful feedback from intelligent stakeholders who want the town to succeed, as well as its sensible developments
you: I wonder what would be the response if you asked what good things could happen?
me: Here are 6 potential positive outcomes from Amherst’s mixed-use development strategy, according to perplexity.ai
– Creation of a more vibrant downtown through increased foot traffic and retail density, as demonstrated by successful college town developments that combine student housing with commercial spaces
– Enhanced economic resilience through diversified housing options, as mixed-income developments can attract both students and young professionals, particularly given the trend of Gen Z graduates choosing to remain in college towns
– Increased tax revenue for the town from commercial spaces and higher-density housing, supporting municipal services and infrastructure improvements
– More affordable housing options for non-student residents through mandated affordable units, helping address housing needs for university staff and local workers
– Concentrated development in the downtown area could reduce pressure on outlying neighborhoods and preserve Amherst’s historic character, while supporting walkable, sustainable living patterns
– New retail and dining establishments in ground-floor commercial spaces could create employment opportunities and enhance amenities for both students and year-round residents, as college towns typically maintain stable consumer demand
I am totally interested in an intelligent discussion with our town’s developers, and have tried to be in that discussion. I don’t see AI as having the answers, but at least in this case, there was some more discussion.
And yes, Bank of America is a weird building on an unfortunate intersection, that will undoubtedly be a rotary before too long.
Are UMass, Hampshire College and Amherst College dorms full? Can school occupancy data be provided to town officials? What percent of the dormitories are vacant? With the evolution of off site remote learning I wonder if the demand for campus student housing has decreased. Could shuttered dorms be retrofitted and become available for Amherst residents?
That’s great idea, retro fitting the dorms.
I would love to relive my college days …, Part 2. 🙂