Student Housing Development Attracts International Investors
Peak Campus Development's Jeff Githens discusses how students' expectations in terms of housing changed and what he expects from the industry going forward.
By Adina Marcut
Universities are facing challenges that have a direct impact on student housing—keeping pace with technology, aging residence halls and Millennials’ expectations for campus amenities, to name a few. For many universities, partnering with a private company has proven to be the right solution for coping with these challenges.
With nearly 850 units in its management portfolio, according to data provider Yardi Matrix, Peak Campus Cos. ranks among the largest student housing companies in the country. Running the company’s development efforts is Jeff Githens, who discussed trends and predictions for the student housing market in an interview with Multi-Housing News.
Which universities completed the highest numbers of development projects in 2017?
Githens: Texas A&M University saw a surge in development with more than 2,300 beds entering the College Station market. Additionally, Northern Arizona University and Arizona State University both had more than 800 beds come into their respective markets in 2017.
What can you tell us about Peak Campus’ development pipeline?
Githens: Peak Campus has 13 student housing projects totaling more than 8,000 beds under development between now and fall 2021.
Which metros will be the most sough-after this year?
Githens: We see a strong interest in many of the major state schools and universities where there is an increase in enrollment and a balance between the current supply and demand for additional beds.
What are the overall trends in student housing for this year?
Githens: The development market continues to focus on major state universities, where enrollments continue to grow. Within that, pedestrian-to-campus development is still the predominate opportunity. Students value proximity to campus over nearly all other property features, so location continues to be crucial to success. On a macro level, that overall amenity race has subsided and there’s a shift in importance to customer service.
Students expect a concentrated focus on being taken care of and responded to. Peak has devoted a keen attention to details within this to ensure that from the initial tour through the lease signing process, all the way through move-in and move-out, our residents receive the elevated service standard that they’re looking for.
What are your predictions for the student housing market in 2018?
Githens: We’re bullish on the student housing space for 2018. While we will see some micro markets suffer due to oversupply, the overall macro picture looks positive and we expect to see continued rent growth and high occupancy numbers. We believe that we will continue to see more institutional investment, including a number of international investors enter the space, as well. Many of the multifamily developers are looking at student housing as a recession resilient opportunity, with good yields.
Many developers are creating micro-housing units. Is this something Peak Campus did or plans to?
Githens: We have developed micro-units in urban markets—Chicago and Boston, specifically—that are significantly more efficient than the existing conventional supply. This appeals to students because they still receive a fully appointed apartment and they are comfortable that the overall smaller unit size equates to lower rents comparative to the existing conventional competitors.
What are the differences between last year’s trends concerning amenities and this year?
Githens: Overall, amenities are calming down and there’s an emphasis on replacing underutilized spaces like movie theaters, tanning beds and game rooms with more study spaces. Students prioritize these dedicated study lounges and further look at whether free printing is included therein. This will surely continue into 2018. Characterizing these features is the task in making these physical spaces more efficient to maximize the balance between value per square foot. Aside from amenities, technology and bandwidth are both important components in new projects, and there’s a shift in this to include automated package locker systems to keep up with the demands of residents.
More and more companies are using the P3 (public-private partnerships) policy for future projects. Is that something Peak Campus does as well?
Githens: Peak has pursued P3 opportunities in the past, especially over the last 18 months, and we continue to ramp up our efforts and partnerships in this space given the continued growth with P3s.
Image courtesy of Peak Campus Cos.