Austin-based American Campus Communities owns and manages more than 21,000 student housing units across the country, of which roughly 2,000 are in Texas’ capital. The metro has experienced a surge in multifamily construction in recent years, as tech companies have opened outposts here, drawing new residents to the area and creating housing demand, including for more student housing units.
As part of ACC’s American Campus Equity (ACE) program—a public-private partnership that provides on-campus housing—the company’s Chief Marketing Officer Jason Wills revealed to Multi-Housing News details about the firm’s most recent student housing projects. Wills also talked about development trends in the market as well as ACC’s investment strategy.
Please tell us the latest on the ACE program. What major projects are in the works?
Wills: Our American Campus Equity structure is the industry’s most proven mechanism for achieving stated financial objectives and preserving debt capacity for other mission-critical, institutional initiatives. Our ACE structure has been used to finance $2 billion of student housing consisting of 32 projects. We are continuing to monitor many institutions that are considering a variety of financial structures, including equity-based models.
As part of our ACE program, American Campus Communities recently announced that we will be leasing land from a subsidiary of Walt Disney World Resort to develop a $615 million student housing project for the participants of the Disney College Program. The project would be built in multiple phases, with construction beginning in November of this year.
What is impacting student housing design?
Wills: As always, students are focused on affordability. Therefore, our unit designs and building programs emphasize efficiency and a diversity of single and double occupancy unit configurations with corresponding rental rates. Students value privacy, but are willing to share spaces if they deem their accommodation affordable.
Tell us a few words about student housing development trends you noticed lately.
Wills: The evolution of the modern student is influencing the design of university housing across the nation. The classifications of university students have varying expectations when it comes to privacy versus community living—there is no “one size fits all” for modern student housing. First- and second-year students often choose more traditional residence halls with shared spaces and common floor bathrooms, while upperclassmen live in apartment communities that provide increased privacy, with single bedrooms and full kitchens and living rooms.
With differing needs regarding privacy and community living among college student classifications, ample academic and social resources are vital in modern student communities. With increasingly portable technology, students are no longer chained to their desks. Instead, students take their schoolwork outside, to community spaces, study spaces and cafes, prompting the student housing industry to focus on the quality of our indoor and outdoor spaces.
How have your residents’ needs changed in the past few years?
Wills: Today’s university students need varied options for privacy and community living, modern spaces for fitness, study and socialization and a technology-enabled and environmentally responsible community. We are also seeing residential and community assistants become a norm in both on and off campus student living.
In the past, community assistants were perceived as an on-campus standard, but student paraprofessionals have become an off-campus norm in modern student housing. Students and parents recognize that community assistants and a purpose-built community are vital in supporting the academic and personal success of the modern student.
What should investors in the student housing industry keep an eye on?
Wills: Transactions are becoming larger and more complex. University P3 (public-private partnership) projects increasingly include multiple phases and non-revenue generating, mixed-use spaces including academic buildings, administration offices, honors colleges, recreation buildings, dining halls, maker spaces etc.
From a university objectives perspective, emphasis is increasingly being placed on the desired level of risk transfer to the private sector balanced by a desire for university oversight and shared governance. Areas for risk transfer may include pre-development risk, construction and delivery risk, initial lease-up and stabilization risk, operations and maintenance risk and long-term capital reinvestment risk.
Name three aspects that you now take into consideration when developing a student housing community.
Wills: This year marks American Campus Communities’ 25 Year anniversary. For 25 years, we have had the opportunity to work with the best in the industry to develop, own and manage high-quality student housing communities across the nation. Partnerships with universities, project teams and our peers have shaped our success for a quarter of a century.
Since our inception, we have based our investment criteria on the following three items: Location to campus, markets with barriers to entry and ability to offer a differentiated project. We have used this criteria to develop more than $7.5 billion in modern, purpose-built student housing.
What are your expectations for the year ahead?
Wills: Universities across the nation continue to be dramatically underserved when it comes to high quality, academically oriented student housing located on or proximate to campus, leaving ample opportunity for new development. In 2017 and 2018 alone, ACC opened approximately $1.2 billion of owned development and presale development projects on or pedestrian to university campuses. With a current owned development and presale development pipeline totaling $1.1 billion, we expect our development program to remain active into the future.
Image courtesy of American Campus Communities