4 factors driving the student housing market

1. UNIVERSITIES GO BIG WITH COMMON SPACES AND ACADEMIC AREAS.

Cornish College of the Arts, in Seattle’s Denny Triangle neighborhood, had been offering students housing in nearby motels. That changed last August when the college opened Cornish Commons, a 20-story, 432-bed residence hall. The 156,000-sf facility includes 16,850 sf of academic space, student life and counseling offices, and a “living room” on the first floor with a fireside lounge. The first three floors are open to all of the college’s students, and there are four full-sized theater studios on the second and third floors.

Lavish amenities that have become signatures of on-campus housing “are changing into ‘equity amenity’ spaces,” because students are demanding more value from where they live, says Jason Jones, AIA, NCARB, Associate and Student Housing Market Leader with Ankrom Moisan Architects, which designed Cornish Commons. His firm is now working on a 280-bed student housing project for Seattle University that will be live-learn and mixed use, with administrative offices.

That colleges and universities are putting more academic and social spaces in their housing is a recognition that “a lot of what students learn isn’t in the classroom,” says Michael Liu, AIA, NCARB, VP and Principal with The Architectural Team, which works primarily with private developers designing mid-rise off-campus housing.

2. HOUSING GETS BRANDED AS LIFESTYLE TAKES CENTER STAGE.

Internet bandwidth is just one of the residential amenities that colleges use as selling points to lure students.

Temple University has featured Morgan Hall—a 1,275-bed residence hall that, at 24 stories, is the campus’s tallest structure—prominently in the school’s marketing, says Dan Kelley, FAIA, Senior Partner with MGA Partners Architects. His firm designed this three-building complex, which includes a large dining hall and a floor dedicated to student activities.

Schools also tout amenities that, over the years, have gotten more resort-like: infinity pools, huge fitness centers, golf simulators, rock-climbing walls, bike repair stations, and concierge desks.

Many schools view housing as an extension of their brand, says Michael Johnson, AIA, NCARB, President and Design Principal with Carrier Johnson + Culture. “On-campus housing has become far more amenitized, and there’s been a move toward higher densities, which affect the architecture,” he says. Johnson is seeing more on-campus housing that’s designed to “be as close as it can be” to market-rate apartments that compete for student renters. Branding plays a vital role.

3. COSTS PLAY A BIGGER ROLE IN WHAT GETS BUILT.

These branded edifices paint a somewhat skewed picture of student housing as Shangri-La, when a lot of what’s out there is anything but. MGA Partners’ Kelley says he still sees a fair amount of basic “Comfort Inn-type” off-campus housing. Other sources point out that dorms built in the 1970s and 1980s comprise the bulk of many colleges’ on-campus housing stock.

The availability of capital dictates what gets built or renovated, where, and at what quality level. Developers have been adjusting their budgets to account for higher land costs to meet investors’ craving for higher-density off-campus student housing that’s as near to schools as possible.

Nearly all of Campus Advantage’s recent projects have been infill, says Michael Orsak, its SVP of Investments. That includes The Knox, which Campus Advantage developed with Pinecrest Partners. This 101-room, 382-bed community will serve students at the University of Tennessee’s main campus in Knoxville. The Knox’s two buildings, one five levels, the other six, are squeezed onto 1.6 acres of land.

Land cost and availability are factors that may have contributed to a 24% falloff in off-campus bed deliveries, to around 47,000, in 2015, according to the market research firm Axiometrics.

“With so much of what’s being built and developed in core urban areas closer to campuses, it’s harder to find land for these projects,” explains Taylor Gunn, Axiometrics’s Student Housing Analytics Leader.

Land, or lack thereof, is presenting a quandary for colleges and universities that want more students to live on campus. Also lacking, in many cases, is sufficient capital and the management expertise to operate an expanded housing portfolio.

4. DEMOGRAPHICS ACCELERATE DEMAND.

Land and budgetary constraints notwithstanding, most market watchers foresee steady, sustained demand for student housing for at least the next five years.

In a recent interview with REIT.com, Randy Churchey, Chairman and CEO of EdR, a leading REIT and one of the largest developers, owners, and managers of student housing in the U.S., noted that about half of students at a typical university live off campus in single-family homes or other accommodations.

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