Back to School Roundup on Student Housing Development
Now that everyone is back in school, we thought you'd appreciate a synopsis of current student housing trends that were presented at the recent 2014 Bisnow Annual Student Housing conference.
We think student housing is a great asset class.
Not only was this confirmed at the conference, but we have anecdotal evidence as well. The constant griping we hear from students and parents alike about the high cost, limited availability and marginal quality of student housing can only mean lots of opportunity for those of us in the real estate industry.
Opportunity and Risk
According to American Campus Communities CEO Bill Bayless, the keys to successful student housing projects are proximity to campus and a differentiated product in "high barriers to entry" markets. Thus, competition to build on-campus is fierce, and features such as climbing walls, outdoor swimming pools and lounges filled with natural light and entertainment options (see below) are not uncommon.
Given the demand for modern accommodations, as evidenced by the premium pricing that newer amenitized housing commands, developers are pursuing both retrofit and ground-up development opportunities. The CEO of EdR, Randy Churney, noted that the 3,000 beds EdR is developing at the University of Kentucky are 200% oversubscribed, while existing older student housing is 45% undersubscribed.
But it's not all rosy out there in Student Housingville. Campus Evolution CEO Andrew Stark noted that overbuilding is a problem in at least a dozen university markets, including Texas A&M, University of Central Florida and Georgia Southern University. Nathan Collier, founder of The Collier Cos., pointed out that 3,000 new beds have been developed in Tallahassee to accommodate 300-500 additional students per year.
One way to mitigate this risk is to build in college markets with diversified economies and strong job growth, which provide a safety net for student housing assets. Donna Preiss, CEO of The Preiss Co., likes Austin and Raleigh for this reason.
It appears that nothing is more important than fast internet connectivity. Various speakers noted that WIFI trumps functioning plumbing and that bandwidth primes square footage, in keeping with a trend toward smaller units.
On the health and wellness frontier, kitchen facilities and fitness centers are de rigueur, while Vitamin-C infused showers and light enhancements that align the body's circadian rhythms with the sun are still somewhat novel.
These amenities sure sound different than the ones I enjoyed in the dorms at SUNY Albany and Columbia University!