Internet Is the New ‘Location’ in Student Housing

Las Vegas--At the National Apartment Association (NAA) Student Housing Conference and Exposition in Las Vegas, a panel of college students--most of whom have been living in off-campus student housing communities for a few years and are on their way to graduate school--expressed how living close to classes is important. However, location pales in comparison to another far-more-crucial criterion: Internet connectivity.

Las Vegas—At the National Apartment Association (NAA) Student Housing Conference and Exposition in Las Vegas, a panel of college students–most of whom have been living in off-campus student housing communities for a few years and are on their way to graduate school–expressed how living close to classes is important. However, location pales in comparison to another far-more-crucial criterion: Internet connectivity.

“Internet is the new ‘location,'” says Miles Orth, EVP and COO of Campus Apartments LLC.

Every speaker at the conference concurred; today’s students want high-speed Internet on the day they move in, and they don’t expect to pay extra for it. This means that subscription services are categorically a bad way to go. A successful owner/operator will instead ensure that high-speed service is pumped into every unit and every common area—Wi-Fi preferred. It’s also essential that the bandwidth can handle all the traffic. As J Turner Research President Joseph Batdorf put it, “Internet connectivity is not an amenity; it’s a necessity.”

According to one study, students today spend 40 percent of their lives online. A typical snapshot of a student’s bedroom looks much different than it did a decade ago, because certain things are missing. There is no TV, no phone and no stereo, because television, movies, video chatting, gaming and music are all consumed online (and, of course, landlines are all but extinct). The online world isn’t merely about Facebook and Hulu, either. Many students take online classes mixed in with their regular classes, and if their connection drops when they’re trying to retrieve or upload an assignment, that can mean a drop in their grade. One student says she took a course where she had to watch an entire TV series online. Not to mention all the research done online. If the connection drops, student life stops. One starts to get the impression that students would rather go without running water than the Internet.

If you think college life for a 20-year-old student in 2011 is saturated by the Internet, try to picture what it will be like 10 years from now. Christine Richards, SVP of operations for Allen & O’Hara Education Services, says her son does his homework online—and he’s seven. “I can hand him my iPhone, and he can work it better than I can,” Richards says. As for her other son, who is 14, he’s completely submerged in technology. She walks in the room, and he’s talking to his girlfriend on Skype, interacting on Facebook, streaming music online and texting his friends on his smartphone, all simultaneously.

That’s part of the reason a student housing complex needs massive bandwidth capacity; these residents own laptops, iPads, smartphones—multiple devices per person. Put four of these techno-monsters in the same unit, and put multiple units in a complex, and the signal can get jammed pretty easily.

Richards says she has seen what happens when students have a slow Internet connection: The students leave. Sometimes they’ll complain or blast their frustration on Facebook, but it’s the quiet ones who are the real killers, she says, because they don’t tell you; they simply don’t renew their lease. And at that point it’s too late, because improvements require infrastructure updates and equipment changes, and these days things simply move too quickly. They need their connection, and they need it now. “If you are reactive to an Internet issue,” as opposed to proactive, “you are too late,” Richards says.

Orth puts it simply: “Low bandwidth equals low occupancy.” The students will not only leave; they’ll tell their friends.

For this reason, Richards and Orth agree that you need to monitor your bandwidth usage. Not only that, you need to make sure you have a service provider that allows you to review and increase bandwidth at your community annually. Don’t leave it up to third parties to supply enough of a service that practically equates to oxygen for your residents.

Two numbers really drive the point home. One, according to Nielsen’s law—as Orth calls research by Nielsen—since 1998, bandwidth demand has increased 50 percent every year, and that increase is expected to hold, if not get even steeper. The second number comes from a survey that Batdorf and his team at J Turner Research conducted across 130 communities, with about 10,000 responses. It found that 64 percent of students would consider relocating if their Internet speed were slower than they expected it to be.

Depending on the kind of upgrade needed and the size of the community, a bandwidth upgrade can run somewhere in the range of $30,000 to $80,000, but it’s cheaper than the occupancy-shortfall alternative. One attendee asked, in regards to bandwidth, “How much is enough?” but no one had an answer. The only technology on the horizon that could start to replace this demand is the rise of 3G and 4G coverage that one can take advantage of on an iPad, for instance, but that coverage is nowhere near reliable yet, especially with a concentration of, say, 200 students all using it at once.

J Turner Research’s survey also found that 97 percent of students expect Internet service after they graduate that is at least as good as what they have in school. So, non-student housing operators, be forewarned.

Panelists in the opening session were very enthusiastic about student housing, talking about its high demand and constrained supply, its rising rents, and how it’s a recession-resilient industry. But, with all the room for growth, this is one area where you either get ahead or get left behind. This is, after all, one of those rare industries where kids call the shots.