Making the Grade: Keeping up with Student Housing Competition
- Sep 29, 2016
Development, ownership and management of private student housing has long been big business. Today, leading providers vie to deliver residential settings that in some instances rival those of luxury apartment communities, providing collegians with a level of sumptuous living earlier generations could scarcely have imagined.
As developers ratchet the bar steadily higher, the trend toward deluxe accommodations begs the question: Just how competitive is your student housing?
First, though, an update on the student housing pipeline. In August, Axiometrics estimated that developers will deliver 47,700 beds of purpose-built, privately owned student housing in time for the fall semester. Of the 10 markets in line for the most new product, seven are in the Southwest or Southeast. The total marks a significant decrease from only two years ago, when deliveries totaled nearly 62,000. But Axiometrics suggests that the more modest size of this year’s pipeline is more sustainable.
Finding an edge
As with every other multifamily category, location is the No. 1 quality that influences the competitiveness of a student housing community. When young residents and their parents go shopping, they are most concerned with finding convenience and safety. As a result, “proximity to campus is the most important factor in today’s student housing,” explained J.J. Smith, COO with CA Ventures. This fall, the Chicago-based investment, development and management company will deliver eight properties and 4,000 beds, which will be about 97 percent occupied. And in the absence of a prime location, Smith added, “the cottages and garden-style product built on the outskirts must be highly amenitized.”
Besides location, important considerations include robust Internet and Wi-Fi service, bed-bath parity and amenities, that vary widely by region. “It all depends on the market and the competitive set within the market,” said Chris Richards, executive vice president & COO with EdR, the Memphis-based student housing REIT. Other considerations include where students’ friends are living and professional on-site property management.
According to Miles Orth, COO of Philadelphia-based Campus Apartments, sustainability carries unprecedented weight. “Today’s generation of students want to live in environmentally friendly facilities within walking distance of campus,” he told MHN in May.
An older community that’s close to campus may have an ace in the hole, even if it lacks the sizzle of a freshly completed project. In these cases, an owner willing to make a modest investment will reap the rewards. “If you have a community in an advantageous location but the buildings are a little behind the times, a renovation where exterior spaces are revamped, amenities enhanced, Internet capabilities strengthened and interiors updated is worthwhile,” Richards said. “The reward is a thoroughly modern community with a location that newer communities aren’t able to match.”
CA Ventures achieves attractive returns by upgrading common amenity spaces with touches like fresh décor, fixtures and
finishes. New flooring and appliances can likewise rejuvenate individual units. “For example, we renovated a dated property called Rivermill Apartments in Athens, near the University of Georgia, in 2012,” Smith said. “And (CA Ventures) leased it to 100 percent. Later that year, we sold that property as part of a larger portfolio.”
Fresh paint, landscaping and other touches that enhance curb appeal are musts. As Smith pointed out, the exterior condition of the property gives a critical first impression of the community to visiting students and parents. To that point, Richards observed that “an attractive property makes for happier residents, who recommend those communities to their friends.” Manicured grounds, new paint and other exterior touches are as critical as word of mouth in attracting residents, she noted.
Most likely to succeed
Student housing amenities should offer a balance between recreational and study spaces, Smith believes. Today’s students want to interact with their peers in communal spaces. Pools are a must in Southern climes, hot tubs in colder ones, he argued.
Richards, too, reports that popular amenities vary by region. “Our property in Wisconsin (has a) sand volleyball court that doubles as an ice rink in the winter. In Arizona, one of our properties has a lazy river as its pool. … Our communities in northern states offer more indoor amenities, like golf simulators or yoga rooms, and Southern properties offer more outdoor spaces that take advantage of the milder climates.”
Other aspects, though, play crucial roles in filling properties. One is price. Offering lower rates can keep a well-located student housing community at capacity for decades. This poses a challenge to developers of infill high-rises, whose higher land and construction expenses require them to charge higher rents, Smith said. “CA Ventures can flex its economies of scale muscle when purchasing building materials for thousands of units a year,” he noted.
Quality of service counts, too. “Parents are trusting our management team with 18 to 21 year olds away from home for the first time,” Smith said. “Our management team provides state-of-the-art life safety and security features, as well as a personal support system of management professionals and guidance to keep its residents focused on what is most important when (students are) at school.”
Continual enhancements to lifestyle programs and resident engagement also come into play. All CA Student Living properties offer resident programming designed to enhance study habits, encourage prudent financial planning and assist in attaining career goals, Smith reported.
Most EdR marketing geared to keep its communities competitive is conducted in social media, and the content changes almost weekly, Richards said. The company’s first online marketing efforts started out many years ago on MySpace. In July, as Pokemon Go became the rage, many EdR properties turned into in-game “gyms” to generate foot traffic and attract potential new residents.
“What’s hot today could be worthless in 60 days,” Richards said. “We have to stay aware of what the next thing is, so we can be mobilized to take advantage of it.”