Cardinal Group on Dealing With Student Housing Operations: Q&A
- Jan 27, 2021
Hard times require strong leaders. Last year was a difficult year for student housing operators. They needed to adjust their protocols and strategies to deal with an ever-evolving outbreak situation. Apart from many residents losing their jobs which made it hard for them to pay their rents, the student housing operators had to deal with team members’ own well-being and personal discomfort at work as well as at home.
Cardinal Group CEO Alex O’Brien talks about how the market performed last year, and he gives his predictions for the sector for the next 12 months. Additionally, he shares his view on whether things will go back to the way they were prior to the outbreak, or if we should expect some permanent changes to the student housing market.
READ ALSO: Student Housing Real Estate: 2021 Prospects
Please share a few details about the challenges Cardinal Group has faced during these trying times.
O’Brien: For most housing providers, 2020 was extremely challenging. As a business, we had to adjust to an ever-evolving situation related to COVID-19 protocols. In student housing specifically, we dealt with a challenging March as most students vacated their off-campus housing and returned home. Many were uncertain about returning in September and the universities were constantly adjusting their in-person and online education strategies.
But the most difficult part of the year was the fatigue—mentally and physically—that this year had on our leadership and onsite teams. Frankly, it was very hard to try to keep morale up while our team members dealt with personal discomfort at work and at home while so many people were getting sick. We care about our residents, so it was taxing to try to navigate the challenging situation when so many of our residents were losing their jobs and were unable to pay rent. The human toll this year was just so tragic.
What was the most important business lesson you learned last year?
O’Brien: For most businesses, most of 2020 was spent in crisis management mode. The businesses that proved to be more resilient, however, were those that had prepared for crisis well in advance. And as we learned during the Great Recession, the best way to prepare for a crisis is to be a people-centric business with a strong team culture. Although we didn’t predict that 2020 would be such a tumultuous year, we were prepared for it by always focusing on our culture and taking care of our people.
How has the pandemic—along with all the announcements that major universities and colleges would be shifting to online classes—impacted your business operations?
O’Brien: Student housing this year was one of the most resilient sectors of real estate. Despite a decline in international enrollment, the lack of on-campus operations and many freshman students taking a gap year, the industry still performed well from an occupancy standpoint.
How has your marketing strategy changed since the onset of the pandemic?
O’Brien: For years, we have focused our marketing efforts on video, digital, mobile and reputation management. The only change in 2020 was that we drove that traffic to virtual leasing tours and virtual leasing agents compared to in-person tours. The transition was quick, and the industry at large was well prepared to continue to prelease apartments.
What is your advice to student housing operators in 2021?
O’Brien: Property managers should do what we have always done—focus on our residents’ happiness and well-being. Our industry is always evolving and adapting, and we will need to do so in 2021 as well.
As CEO, what is your strategy for growing the company’s student housing portfolio?
O’Brien: We will continue to grow our national management platform with strategic partners and will continue to invest opportunistically across the student housing value-add spectrum.
As the vaccine is rolled out, do you expect things to go back to the way they were? Or are there any permanent changes that we should expect?
O’Brien: Cardinal has never believed in “the way things have always been” and I certainly don’t expect things to ever go backward. We are always innovating, always evolving—as a business and as an industry. Over the last decade we have seen changes to floor plans, unit sizes, desired amenities, customer experiences and so much more. I expect that trend of constant change to continue as our customers continue to change their demands.
What are your predictions for the student housing industry in 2021?
O’Brien: Last year was a very strong year nationally for student housing and I expect that trend to continue, and even improve, in 2021. We expect the majority of students who took a gap year in 2020 to return, and we should see international enrollment return to pre-COVID-19 numbers. We are expecting to be able to push rental prices this year and with strong performance, we should see the development pipeline start to fill back up, especially in strong, Tier I markets.