It’s a great time to be a student. As multifamily investors seek this stable, recurring source of income, they’ve upped their game to attract Millennial students by offering great amenities. More and more, student housing is no longer synonymous with dank, dark spartan dwellings.
Investors have taken notice of student housing’s potential. According to the National Center for Education Statistics, students attending U.S. colleges have grown more than 25 percent since the turn-of-the-century, with more than 20 million students registered. The National Multifamily Housing Council (NMHC) notes that schools are facing “an aging existing supply, more controlled supply growth and limited pedestrian-to-campus land opportunities.” In response, more than 350,000 off-campus beds have been added over the past seven years, according to Axiometrics.
Seeing student housing as a lucrative investment, investors are reimagining traditional cinderblock, multi-roommate college housing. They recognize that today’s students are discerning consumers. In response, great amenities such as pools, community rooms, granite counter tops, nice furniture, cable, gyms, spas, flexible lease options and more are being used to lure college students into off-campus housing.
Green is Good
This generation of college students also care about the environment. Balancing students’ expectations for high-end amenities and sustainability while keeping housing affordable will increasingly challenge investors. A theme at last year’s NMHC’s student housing conference was that building owners are focused on cutting their operating costs. Among the best ways to lower utility cost is making energy efficiency upgrades increasingly important.
Over the past year, GreenGen has assessed numerous student housing complexes across the country to evaluate the potential to reduce costs via energy efficiency upgrades. These assessments revealed a variety of opportunities for cost savings and value creation, most notably around lighting efficiencies.
This was the case for a student apartment building in Tucson near the University of Arizona. Even though the property was relatively new, the assessment revealed significant opportunities to upgrade the lighting systems and controls and create property value.
A key recommendation was a combination of fixture and lamp replacements, as well as the addition of occupancy-based controls. LEDs offer much greater efficacy than their incandescent, fluorescent, and metal halide equivalents. Also, the life of an LED is between three and 10 times longer than the lamp and/or fixture it replaces. There was a strong opportunity to reduce costs through the use of automated occupancy sensors in intermittently occupied spaces.
The vending area also presented savings opportunities. Snack machines often operate all day even though they are not continuously used by residents. Occupancy-based vending machine controls turn off machine lights and cycle down compressors to optimize savings while maintaining desired temperatures. Typical savings for these controls are in excess of 50 percent.
Another savings source is to reduce water consumption. At the Tucson housing, most faucets in the apartment restrooms consume 2.0 gallons per minute (GPM). However, Energy Star’s recommended consumption levels are 1.5 GPM and lower, and aerators that go down as far as 0.5 GPM are available as well. Retrofitting existing faucets with pressure controllers will reduce water consumption and water heating costs by maintaining a consistent GPM flow. Installing efficient showerheads that prevent hot water from running down the drain while waiting for it to heat up is also a great way to save.
Controls for Class Schedules
Student energy usage ebbs and flows with their unique calendars—spring, winter and summer breaks. Owners can capitalize on student breaks by optimizing building operations around the school schedule. Using controls to better use and run equipment ensures that facilities can maximize savings during down times.
Controls can include simply controlling devices or managing whole systems. At a minimum, lights should have sensors that turn off or dim when no one is around. Part of the implementation strategy for occupancy sensors is that light levels meet safety requirements and that the occupancy sensors are properly located. Prime locations are resident rooms, corridors, elevators, common or recreation areas, and garages. A well-designed controls platform means energy usage correlates with physical occupancy. From the student’s perspective, that means the lights are always on when and where they are present. Device controls can be simply and quickly rolled out and designed to function with most any fixtures to take advantage of nearly immediate savings.
Implementing these type measures will significantly improve the property’s efficiency and decrease its energy consumption and costs. At the Tucson student multi-housing complex, the facility upgrades, combined with available rebates, will increase the building’s value by more than $1,827 per bed, totaling nearly $1.1M.
Developing custom solutions ensures savings opportunities for every property. Lighting efficiencies and plug load reductions are generally at the top of the list because they are often the least expensive, provide the quickest net payback, and add value to a building, as well as increase the comfort and safety of residents, improving the resident experience.
Best of all, operating in the green can be a rallying point for investors and their young customers.
Brad Dockser is the CEO and co-founder of Green Generation Solutions LLC (GreenGen), which engineers and implements comprehensive integrated energy efficiency solutions that lower operating costs while improving sustainability on behalf of a diverse set of clients worldwide. He has more than two decades of real estate investing, including as a principal with MacFarlane Partners; partner and COO for Western Development Corporation; and managing director for Starwood Capital Group’s international operations. He serves as co-chair of the Urban Land Institute Washington Sustainability Initiative and vice chair of the ULI Redevelopment and Reuse Product Council and is a member of the US Green Building Council, the International Society of Sustainability Professionals (ISSP) and the Asia Green Building Council Steering Committee.