When it comes to developing purpose-built student housing, the single-most important factor that ensures a good lease up semester after semester is proximity to campus. After that, it’s all about the amenities. But these assets, which are often run like a cross between an apartment community and a resort, are a different beast than market-rate rentals. It makes sense that the design and operation of the amenity space is another animal as well.
Take, for example, that you are 14 times more likely to find a tanning salon in student housing versus a market-rate community, according to data from Property and Portfolio Research, a CoStar company. The group compared the amenity packages at all the student and market-rate housing developments between 2000 and 2012 in Tallahassee, Charlotte, Austin, Lubbock, Dallas and Raleigh-Durham. These are all extremely strong university markets—in fact, over 30 percent of student housing deliveries since 2000 have occurred in either Texas or Florida. Their data also shows that you are four times more likely to find a game room and more than twice as likely to find a media center or movie theater in these student housing assets compared to their local market-rate counterparts.
This brings up two major questions. What is so important about these types of amenities in maintaining strong occupancy rates, and what lessons can market-rate apartments learn from student housing’s approach to amenities?
A foundation of social spaces
“Since day one, our strategy has been to provide a more robust selection of areas that our students can socialize in,” says Ted Rollins, CEO of Campus Crest Communities, a student housing REIT that operates a portfolio of 39 properties with close to 21,000 beds. “One of the biggest successes we have had is ‘sticking with our knitting’ on using these spaces to create student interaction and events on an ongoing basis.”
Campus Crest currently has six properties set to deliver in 2013, and they will include the latest refinement of their amenity offering that includes swimming pools, sand volleyball courts (a Campus Crest staple), spas, fitness centers with tanning salons, game rooms, media centers and outdoor firepits. But at the heart of all these spaces is SCORES, the company’s residence life program that incorporates Social, Cultural, Outreach, Recreational, Educational and Sustainability elements into student life programming.
“We have found that when we run these programs and engage our residents in the community, it creates both a happier and stickier resident,” Rollins says. “So the amenities are really the first chapter of a two chapter book. We don’t look at a pool and say, ‘Gosh, it is big and shinny.’ We look at a pool and say, ‘Here are the activities we are going to run on a given day.’”
Each Campus Crest community has roughly nine work-live upperclassman students tasked with keeping the residents engaged. With each generation of product there come certain tweaks to the amenities that help reinforce community interaction. The game room, for example, is set up like a tavern with traditional foosball and billiards, as well as games that vary depending on the market and what is popular (apparently Big Buck Hunter Pro is definitely ‘in’). The sand volleyball court has been updated over the years and now features bleachers for spectators, as well as nearby fire pits set up with Adirondack chairs.
“We look to make these niches so they can socialize and enjoy each other’s company. It’s our job to get them engaged. I say, a bit tongue in cheek, that we build complexes that are run like a cruise ship,” Rollins says.
The actual living spaces aren’t too shabby either. Private baths with tub/shower combos, full kitchens and walk-in closets certainly help attract students away from on-campus dorm-style housing.
“Sure, the amenities are great and the lifestyle we provide really gets the students involved in these spaces, but really on the basic level, we still provide one of the best apartment layouts in the business,” Rollins says.
Survival of the freshest
Gilbane Development Co., a developer that builds both student and market-rate housing, is starting to implement elements of its off-campus products into market-rate designs. While the designs are property-specific, smaller apartments and large amenity spaces—the calling cards of purpose-built student housing—are making their way into a development targeting the 22- to 32-year-old rentership market. Gilbane Development Co. recently broke ground on a 396-unit market rate project in Chandler, Ariz., located about a half-mile from Intel’s second largest campus. In August, the chip-maker announced an expansion plan to build a $300 million R&D center, which ultimately means hundreds of young and highly skilled workers looking for a place to live.
“I would say that our student housing developments are influencing market-rate assets in urban locations,” says Bob Gilbane, chairman & CEO of Gilbane Development Co. “These market-rate apartments are going to probably be a little bit smaller than they have been in the past, but they will have a lot more community space in them in terms of overall amenities.”
The new project in Chandler will feature two clubhouses and two-resort style swimming pools based on the student housing amenity package that has evolved at Gilbane Development Co. The transition from dorm-style to resort-style properties began with a public-private partnership with the Rhode Island School of Design. Gilbane Development Co. had acquired a 300,000-square-foot, 1917-built bank about 300 feet away from campus. An adaptive reuse plan converted the asset into a living-learning environment, where the big amenity was a new international design library. After completing the project in 2006, Gilbane Development Co. began to look more into purpose-built student housing construction. This called for a new approach to amenities.
“I would say our evolution was figuring out how you could combine all of the things we were missing in our student housing experience with much nicer amenities. We sat around a room and thought of all the things we didn’t like about our own housing experience in college. We went through the common list: no private bathrooms, no living rooms, no kitchens, no washer-dryers in the units, no high-speed internet. Then we said let’s see if we can come up with a product with some features that you might find in a W Hotel to make it a cooler living experience.”
The company got the chance to put this brainstorming session into action when they bought a block in Richmond, Va. across the street from Virginia Commonwealth University. The parcel carried the address 7,8,9,10 Canal Street, which Gilbane rebranded with the help of two of his children who lived in New York’s trendy Meatpacking district.
“We decided to make the address sound cool and named it 8 ½ Canal Street. We also decided to put in some wonderful amenities,” Gilbane says. The 2008-built asset features courtyards with barbecue pits, community-wide high-speed Wi-Fi, group study rooms, a yoga studio and a modern fitness facility. “We found out that this type of a location with these amenities leased up very quickly.”
Gilbane Development Co. got a chance to build on the success of 8 ½ Canal Street with a new development a few blocks away called 1200 West Marshall Street. The property, which has an expected completion date of August 2013, has an impressive host of amenities, including a fitness center with Equinox-quality equipment, study rooms, meeting rooms, Wi-Fi, a movie theater, two outdoor courtyards with flat screen televisions, bocce courts, indoor racks for 170 bicycles, and a rooftop terrace.
When asked about any amenity trends manifesting in student housing units, Gilbane says that upgraded materials will continue to pop up with more frequency in purpose-built student housing. In particular, he is seeing granite counter tops showing up in more and more projects and plans to put them into 1200 West Marshall. This falls in line with PPR’s research, which showed that while only eight percent of purpose-built student housing delivered since 2000 has granite countertops, almost half of the assets with granite countertops were delivered in the past two years. Gilbane is quick to point out that while student housing has to be designed with maintenance in mind due to the age and behaviors of the renter, a little bit extra can go a long way.
“I approach this business as a retailer,” he says. “It’s all about product packaging, product positioning and creating buzz. You have to create a product that people want. It doesn’t matter whether it’s student housing or market-rate. The goal of an asset should be to fit an unmet need in the marketplace. While it’s impossible to get a monopoly due to the nature of the business, if you get the right amenities, you get a lot closer to being a monopoly.”