State of Student Housing: Study Rooms Among Amenities Driving Strong Growth
Expect the flames fueling a razor-hot student housing market to maintain through the end of the year and into next year.
Executives at the National Multifamily Housing Council’s Student Housing Conference and Exposition in New Orleans in September said this year’s record-setting market shouldn’t cool much, even if the federal government finally pushes through a hike in interest rates. New development could slow slightly but student housing industry leaders expect positive rent growth in 2017.
Student housing is experiencing a record transactional year after concluding one of its strongest lease-ups. Leaders say lease-ups for new inventory are running 95-98 percent with rent growth hovering around 3 percent. Growth has soared as high as 5 percent in some areas of the country where students have made a bee-line for housing.
A new project coming online at the University of Florida leased 600 beds in 10 days.
And while some projects are crimped by construction labor shortages and taking up to a year longer to complete than normal, developers seemingly can’t build them fast enough. One executive glowed over students waiting in line all night to become the first residents at a new development.
But most agree that the Feds will nudge interest rates up next year and expect development activity to drop only slightly. The market, however, should still be brisk with an expected increase in enrollment at major Tier 1 schools and generate rent growth around 3 percent.
Student housing boom brings challenges
Despite the boom, some issues are keeping COOs up at night.
The face of amenities is changing, and developers are sometimes confronted with late deliveries caused by construction delays. Also, laws that permit guns on campus and students trying to evade pet fees by claiming their pets are companion animals are warranting discussion, as well as how to market toward Generation Z students who use social media differently and are more mobile than the previous generation.
When dealing with late deliveries of new projects, leaders say communicating with students and parents, and doing so early, is the best strategy. A contingency plan that includes arranging for off-site storage, pet boarding and even providing an ample supply of moving boxes is good practice. One COO said it may even take filling up a pantry full of groceries to appease residents.
“Give them what they deserve,” she said. “You compensate these students. You didn’t do what you said you would do.”
Technology-driven Generation Z students are challenging developers to stay ahead in marketing. A representative a website provider for the multifamily housing industry says marketing efforts should be geared more towards mobile and that all websites – whether viewed on an iPad, smartphone or large screen – should function the same way. Key information should be concise to fit on a smaller screen, and the function, design, and integrity should carry all the way through.
“They don’t want to wait on a mobile device for a photo or video to load longer than on a large screen,” he said. “That’s important.”
Tougher problems, like managing campus open-carry laws that went into effect in Texas earlier this year, are challenging student housing providers. A good rule of thumb, said one leader, is to work with a legal team and establish the right language to head off any problems with students carrying guns on campus.
‘Tanning beds re-out and study rooms are in’
Students and parents are driving demand for amenity-rich, technologically-fit living spaces that encourage learning beyond the classroom. Common areas are changing with the creation of space that encourages collaboration and study, as well as nicer fitness centers with fitness-on-demand to keep minds and bodies fit.
A few years ago, developers’ attempts to include study areas in student housing hit the floor like a stack of books, but leaders agree that students today want study rooms that provide internet access.
“Tanning beds are out and study rooms are in,” proclaimed one COO.
Study time is also extending outdoors to seating areas equipped with wireless connectivity.
Also, laminate floors, removing walls to open club room space and quality landscaping are important to students, according to one leader, especially when redeveloping older properties. In one example cited, the clubhouse of a rehab of housing built prior to 2000 near North Carolina State was opened to create transitional areas between the facility and the pool. The pool was remodeled to feature a pseudo, underwater half-court basketball court complete with a raised backboard and free throw circle.
And, proximity to not only campus, but local attractions like bars, restaurants, and shopping is important to a property’s success, even if it means working with the university to establish shuttle services.
Effectively managing the resident, above all, is important
But while bells and whistles are important to filling beds, executives say property managers must above all meet the needs of residents.
“People are valuing management. You can have all the golf simulators and lazy rivers, but if you can’t show up and manage them and serve the resident, you’re going to lose the resident.”