Student Housing Meets Mixed-Use
Developers eye projects that accommodate college-age residents and capitalize on the presence of complementary asset categories.
by IvyLee Rosario
Thanks in no small measure to demographics, student housing development is likely to stay active for at least the next several years. During the period 2014-2025, enrollment of students under age 25 will increase 18 percent, estimates the National Center for Education Statistics. This growth spurt will create demand for the off-campus product that makes up much of the housing inventory for undergraduates and graduate students. One trend gaining traction is integrating student housing into settings that feature multiple, complementary asset categories. “For the mixed-use developer, it adds a level of stability. It’s one of the more-low risk asset classes, so when you pair it with something else, it offsets some of the risks you’re taking,” said Scott Gale, president, Ventus Group.
Research and analysis
As with standalone student housing properties, proximity to campus tends to be the most important factor in determining success of a mixed-use project that includes student housing. Market research should pinpoint the location and quality of the available product competing for student residents. The presence of multiple student housing, retail and hospitality options may suggest that the competition may outpace the available market. A large number of nearby developable parcels may point to a potential surge of development that would lead to market saturation. An area that combines steady demand with significant barriers to entry may be more attractive over the long-term.
Transportation is another important factor, as mixed-use and live-work-play developments with a student housing component often work best when public transit provides convenient access to the school.
“It’s important to understand the competitive set, meaning what other housing options are available to students,” noted Howard Kozloff, director of acquisitions at Symphony Development. “We believe that success on a complex mixed-use project requires a strong relationship with the primary stakeholders…and selecting team members with the qualifications and experience to address the inherent complexities of each of the project components.”
Symphony Development is currently working on Northridge Student Apartments, a mixed-use community in the Northridge neighborhood of Los Angeles’ San Fernando Valley. Located one block from the local California State University campus, the four-story property will be constructed on the 1.5-acre former site of a post office and surface parking lot. When complete, the community will feature 5,725 square feet of street level retail as well as 128 student housing units, and underground parking for 240 vehicles and 157 bikes.
Function is everything
After market research and the securing of buy-in from key stakeholders, the next step is to determine which other property categories to include. Retail, hospitality, office, dining and healthcare lead the list of choices. According to Gale, retail and hospitality are two of the most desirable product types. “The retail is an amenity for the students and the students are a demand driver for the retail,” he explained. “The hotel can service parents and friends visiting the school, providing easy access to the students.”
Ventus is developing The Fig, a $300 million mixed-use project in Los Angeles catering to University of Southern California students. Scheduled for completion in 2021, the 4.4-acre community will feature 222 student housing units, 104 market-rate apartments, 82 affordable units, a 298-key hotel, 73,000 square feet of commercial retail, dining and creative office space, and a parking structure.
The office option is also rising in prominence among projects that combine student housing with other elements. Students can be introduced to the workforce and have an opportunity to interact with employers looking to fill jobs or internships. Creating an environment where students can interact with the business community establishes a neighborhood atmosphere, producing relationships with retail owners and staff within the project.
“Incorporating the student housing into a mixed-use facility allows the developer to maximize the value of the land, which in a downtown location is critical to a financially successful project,” stated Dennis Biggs, president & CEO, Development Ventures Group. “We believe that success on a complex mixed-use project requires a strong relationship with the primary stakeholders…and selecting team members with the qualifications and experience to address the inherent complexities of each of the project components.”
In Orlando, Fla., Development Ventures and its partner, Ustler Development, are the joint-venture sponsors of UnionWest, which will feature 640 beds of student housing, more than 100,000 square feet of educational facilities for the two colleges, 12,000 square feet of ground-floor retail and a 600-car parking structure upon completion in August 2019. Union West is part of a much larger initiative—Creative Village, a $1 billion, 68-acre master-planned development that will include the new Downtown Campus for the University of Central Florida and Valencia College. While UnionWest is a private development, it is the exclusive provider of student housing for the new Downtown Campus, another key relationship that strengthens the project’s underwriting and economics.
As Biggs puts it: “We believe that success on a complex mixed-use project requires a strong relationship with the primary stakeholders…and selecting team members with the qualifications and experience to address the inherent complexities of each of the project components.”
You’ll find more on this topic in the September 2018 issue of MHN.