December 19, 2019 |
Updated August 4, 2021
If you want to stay competitive, look for where there is room for new student housing.
As Gen Z replaces Millennials on college and university campuses, owners, developers and managers of student housing are studying the numbers and habits of this younger cohort, born between 1995 and 2012. They want to be sure they build and remodel the right number of student housing communities in the best locations and with the right number of beds and amenities.
The key to smart building and remodeling is to carefully research where enrollment looks most promising and what features most appeal. “Both students and their parents have high expectations,” says David Adelman, CEO of Campus Apartments in Philadelphia.
Here are five lessons worth heeding:
Build where there’s robust matriculation and room for new deliveries.
CA Ventures, based in Chicago, is most optimistic about building at larger public state institutions, says Taylor Gunn, Vice President of Research and Analytics. Because of so much prior development in the southeast, she says, her company looks for opportunities that still exist there, but in niches, such as at universities where more students arrive from out of state or at specific submarkets around the universities. One example is at The University of Alabama, where 60 percent of students come from out of state. CA has identified opportunities to build at UA and in underserved (prime) areas, Gunn says.
Other opportunities exist at universities that were mostly for commuters but are now transitioning to having more students live on campus, says Carl Whitaker, Market Analytics Manager for RealPage, who cites the University of Texas at Arlington as an example. Michael A. Phillips, CFO of Phillips Enterprises in Charlotte, N.C., has focused on off-campus housing at schools with a population between 10,000 and 20,000, such as the University of North Carolina Wilmington and Georgia Southern University, both of which experience consistent enrollment, he says.
Choose good locations and make them better.
Being able to roll out of bed and get to class fast may be a goal, but these days many campuses are so large that even a location on the campus or adjacent may not be close enough when a classroom building is a good distance away. Learn the preferences of each school’s students. It’s no longer considered dorky to live on campus as an upperclassman. Also, check if schools offer shuttle buses that travel the campus or decide if you might provide the service, as well as bicycle and scooter storage. At many schools, good locations have increased from half to one mile away since that may lower costs both for developers and students, says Ryan Kimura, Industry Principal at RealPage. .
Build to conserve land and dollars.
Because of the higher cost of construction, developers are buying smaller sites so they don’t have to spend as much money on land. “Construction is the majority of the cost of the development,” says Adelman. Smaller sites work with greater density—going higher and wider—and smaller apartments so there are still funds and room for amenities.
Seek voids in each market.
So much housing on and near many campuses was built from the 1960s going forward and is now obsolete and needs to be replaced, says Brent Little, President of Fountain Residential Partners in Dallas, which focuses on purpose-built student housing across the country. “But the rehab opportunities close to campus have been very picked over in the last 10 to 15 years, so rehab opportunities are very nominal,” Little says. “Because in most instances with new construction, there’s not a fallow site within one half-mile of a major campus, we are tearing something down to redevelop the site. That means we do a survey of all tracts within walking distance and look at repurposing, and in most instances rezoning those. That provides us with an optimum site location for development of a new student or mixed-use project within walking distance or on a transit/shuttle line. We have torn down old apartments, retail, biker bars, gas stations—you name it,” Little says.
CA Ventures has launched a public-private partnerships division. The team is solely focused on forming strategic partnerships with higher education institutions seeking alternative financing solutions to support campus real estate needs. CA’s vertically integrated platform allows its P3 team to provide institutional partners with comprehensive investment, development and operational expertise for an array of asset classes.
Fulfill the Gen Z wish list.
Resort-style swimming pools once were part of the amenity war on campuses as well as in conventional housing—and sometimes still make the grade. But these days, many matriculated students have lived through their parents’ economic woes. They know it’s tougher to find a good job after graduation and pay off loans. Hence, one feature that appeals to many is a good study space to focus alone or a larger room so several can collaborate, sometimes even with white boards and interactive screens, says Little. Students also want storage lockers for Amazon deliveries and outfitted gyms, he says. Phillips sees a shift from physical amenities to more services and smart features such as locks, doorbells and lights also happening in conventional apartments.