Student Housing Coming of Age
This is an HTML version of an article that ran in the May 2014 issue of Real Estate Forum. To see the story in its original format, click here.
A quick glimpse at commercial real estate headlines reveals student housing projects are being planned, approved and constructed from coast to coast. Many universities just can’t keep up with the demand for student housing and developers are ready and waiting to pounce on new opportunities with modern designs that fill the off-campus housing gap.
Consider the statistics. Public university enrollment increased 38.7% from 2000 to 2010, according to Rental Roost. During that time, the apartment finder’s research reports a 21.4% growth in students seeking off-campus housing. Rental Roost predicts the demand for off-campus housing will continue to increase alongside enrollment as universities fail to keep up with the demand. All this spells opportunities for student housing developers, owners, managers and investors.
“There are great opportunities in student housing to deliver beautiful, close-to-campus housing while creating returns for investors,” says Andrew Stark, principal of Campus Evolution, a New York-based student housing developer. “As the sector continues to grow into itself over the next five to 10 years, there will be a need for discipline by owners and investors to respond to the demands of students and universities. This is a sector ripe for new leaders, not merely aggregators and consolidators, but those who lead with a difference.”
Marking Student Housing Trends
Words like “quality,” “privacy,” “sustainability,” “technology” and “resort-style amenities” spring up in discussions about student housing development trends. Some even argue that student housing development trends offer a glimpse of traditional multifamily housing’s future.
Jeff Larsen, a principal at Irvine, CA-based MVE & Partners, an architectural firm that has designed student housing for California State University, UC Irvine, University of Texas and others, sees low-density on-campus student housing giving way to high-density mixed-use projects off campus. Larsen points to Sandhu Residence Hall at Chapman University in Orange, CA, which his firm designed, as an example. MVE transformed a surface parking lot and a two-story student housing site into a compact three- and four-story mixed-use building with 300 beds, a 26,000-square-foot dining facility, and an 11,000-square-foot conference center—all above a single-level parking structure.
Although the initial cost for development for high-density student housing is higher, Larsen says there are benefits of intensity that translate into efficiencies of compact building footprints, better sharing of services and shorter distances to campus activities.
“I see a conflict between university goals of social and educational growth for their on-campus student housing and the developer-driven goals of appeal and socialization for off-campus student housing,” Larsen says. “Whereas on-campus building layouts focus on right-sized communities or ‘neighborhoods’ and the specific interests of living-learning communities to foster social interaction and intellectual growth, off-campus housing has a focus on independence and convenience.”
Judd Bobilin, CEO and cofounder of Chance Partners, an Atlanta-based student housing developer, says infill is the biggest trend in student housing. Publicly traded student housing companies want to understand walkable, higher-density product.
“The idea of building a project that is one or two miles from campus is a very short-term focus and doesn’t take into account the long-term effects it might have on the communities that we build and own,” Bobilin says. “Merchant builders will continue to strive for any deals, but the major institutions that end up buying and holding these properties for years think much more about longevity of the asset. We operate on the concept of ‘connected capitalism’ in each of the markets in which we invest and develop.”
Next: A Student Housing Flood?