How the Right Amenities Curb Vacancy
In some highly competitive markets, the right amenities, even if they are never used, can mean the difference between 90 and 95 percent occupancy. Find out what they are.
In the Southeastern Conference’s student housing markets, competition is fierce to fill beds. That’s causing developers, such as Brent Little, President of Fountain Residential Partners, to go the extra mile to compete.
Before he built the Beechwood Village project at the University of Arkansas, Little toured other student communities and took detailed notes about what his competitors were offering.
“I noted the pieces of equipment in the largest fitness area [at a competitive community] and how big its pool was,” he says. “I went item-by-item through the fitness center to make sure we had the largest one. It is an amenities arms race, and you have to win when you are in a competitive market.”
To come out ahead, developers may need to offer golf simulators, firepits or volleyball courts. “These are things to give [a community] a little more sizzle,” he says. “Most students don’t use them, but sometimes the sizzle is just as important as the steak. If your location, quality and price are not enough, then you have to have something that grabs the attention of the 19-year-old student.”
In many markets, that “sizzle” Little talks about can be the difference between success and failure. If you are building at Texas A&M, for instance, Little says you may need to include talking Alexa showerheads that also play music while the water is flowing. Last fall, inventory at Texas A&M grew nearly 17 percent, with 3,200 beds privately owned on-campus beds, another 2,300 off-campus beds and several hundred university-owned beds developed, according to RealPage. Since 2011, on- and off-campus inventory increased by 16,500 beds.
“The difference between a 90- and a 95-percent lease rate is 30 kids,” Little says. “If I put a couple of these razzmatazz features, I might be the winner that gets to 95 percent. That’s real value and enables me to better afford the talking shower heads and everything else under the sun.”
Those features are not necessary in every market.
“If you are building in a good solid market, you don’t have to have that splash to get the attention of your marketplace,” Little says. “If a building with standard amenities is enough in that marketplace, you do not need the [physical fitness amenity] rock-climbing walls. It is a waste of money.”
Ashly Poyer, Director of Sales for Peak Campus has seen a shift toward functionality in student housing.
“Students want access to amenities that make their life easier, like self-service package lockers,” she says. “The importance of functional study areas continues to be a trend that students agree with. I believe we’ll continue to a shift to functional tech, such as smart apartments run by Alexa.
You do need to have the basics covered before you start adding smart-home features.
“If you don’t have a lot of bandwidth, you will not be able to upgrade units with smart-home technology,” says Alex O’Brien, President of Cardinal Group Cos. “Study rooms and study amenities are still very popular.”
At Pierce Education Properties, Maureen A. Lannon, Senior Vice President of Marketing, says fitness centers with a separate studio with mirrors, balls and resistant bands, a deck for bikes and gear and personal trainers are popular. Coffee and social lounge areas with soft seating, dedicated desk nooks and light music or television.
“Millennials and Gen Z want a great fitness room opened 24-7 with weights, cardio areas and a yoga room plus an extension outdoor area,” Lannon says. “They want to grab a coffee, stream a movie, burn time before class or socialize with friends at the coffee or social lounges. They seek study nooks, lounges and quiet space with media capabilities.”
Little says most developers are doing “more, better and different” study spaces. It’s a trend that has been on the rise for a couple of years.
As study spaces and smart-home features grow more popular, other amenities fall out of favor. “The hot tub and tanning beds are market and asset dependent,” O’Brien says. “They are not as popular as they used to be.”