USD Selects PPP Model for $230M, 700-Bed Student Housing Project

SAN DIEGO — The University of San Diego has entered its first public-private partnership for student housing, selecting Harrison Street Asset Management and The Michaels Organization to develop Presidio Terrace Apartments, a planned $230 million, 321-unit, 700-bed on-campus community.

The project is expected to open in August 2029 and will serve upperclassmen, graduate students, and professional students, according to Harrison Street’s Sept. 15 announcement.

Presidio Terrace will be built on university-owned land between USD’s academic center and a nearby retail corridor. The project is structured under a 99-year ground lease with the university and will receive a full real-estate-tax exemption as a university-affiliated property. Michaels will develop and operate the community.

The transaction is the first investment completed through Harrison Street’s dedicated higher-education public-private partnership strategy. The firm said the USD agreement lifts its PPP assets under management above $6 billion; its broader platform has completed 64 PPP transactions. Connect CRE reported that the agreement is also USD’s first-ever PPP arrangement.

For the university, the structure is intended to expand housing capacity without requiring the institution to finance, build, and operate the property directly. Instead, USD retains the land through the long-term ground lease while private partners take on development and operational responsibilities.

That division of responsibilities is central to the continuing appeal of PPPs in student housing. Institutions facing capital constraints, deferred maintenance, enrollment shifts, and pressure to improve the student residential experience can use a ground-lease structure to add or replace housing while preserving institutional capital for academic programs and campus priorities.

USD has experienced enrollment growth in recent years, with total enrollment increasing 13.2% since 2020, according to Harrison Street. The developer said Presidio Terrace is intended to address limited institutional-quality housing options for upperclassmen, graduate students, and professional students on and around campus.

The deal comes as student-housing fundamentals remain uneven by market. Yardi Matrix reported that properties across its Yardi 200 university markets were 93% preleased in August for the 2026–27 academic year, while rent growth moderated. Leasing-season rent growth averaged 1.1%, compared with 2.8% during the prior cycle. CRE Daily’s summary of the September Yardi report found that proximity to campus remained a major performance differentiator: properties within one-quarter mile of campus were 93.4% preleased, compared with 88.7% for properties more than two miles away.

For student-housing operators, projects such as Presidio Terrace reinforce the importance of clearly defining responsibility across the university, developer, asset manager, and on-site operator. A successful PPP will depend not only on development delivery but also on durable operating standards, leasing coordination with the institution, student-services integration, maintenance accountability, and resident-experience expectations once the community opens.