News & Opinions
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True or False: The Top 10 Student Housing Truisms, and Myths
Brent Little, president, Fountain Residential Partners / MULTIFAMILY EXECUTIVE / August 20, 2013
1. August Doesn’t Move
The primary difference between conventional multifamily housing and student housing is that August does not move. If you miss your delivery date, or do not lease to pro-forma occupancy by the beginning of the fall semester, you “enjoy” that occupancy for a year. With conventional apartments, you can recoup those leases in the ensuing months with little damage to your returns.
2. Failure to Execute is Fatal
Execution is everything in the student realm. I call it the Apollo 13 method of management; your oxygen is running low and you’re about to burn up on re-entry, and you and your team must solve the problem in the time you have remaining with the people, options, and tools at your disposal–nobody is coming to save you.
3. There is Greater Demand for Student Housing Than Ever Before–Both From Students and Capital
Demand for student housing from both students and capital markets is very high. The product and management of the communities has matured to the point that it is the preferred option of students, and is an institutional-class asset that outperforms. Surveys indicate that, given the option of living in same apartment at the same rate on- or off-campus, two-thirds of students would choose off-campus. When you extrapolate those numbers to the millions of students in the colleges and universities across the country, the unmet demand for student housing comes into focus.
4. Demand is Finite
Student demand is as different as the markets, regions, cities, demographics, and students that are served. If real estate is a local business, student housing is its diffuse cousin.
At least when you develop a conventional apartment community, your location informs your design response with significant information about product preference and locational demographics. Urban locations populated with young professionals require an urban high-density response, while suburban/exurban locations most typically are populated by commuters, families and an older clientele.
Student populations may have 15 to 50,000 targets with discrete components of almost every demographic segment. Assessing those demographic segments and the design response based upon the unmet demands in that specific marketplace is both a science and an art.