Student housing has emerged as a smart investment option for an expansive range of estate investors and developers over the years, as evidenced by the growth of the student housing sector. Both new and prominent players have entered this industry, including Nelson Partners. Even though this industry is definitely becoming more mainstream, it is also emerging to be more competitive owing to more supply in key markets as new operators and investors have entered the space. This creates a challenge for the developers who must try to explore ways to stand out and ensure robust leasing for new properties.
Student housing development has strongly shifted towards high-density products closer to the campuses. In such an environment, ground leases and assemblages are extremely common, thereby leading to an increase in costs for the developers. A proper early-phase market assessment is vital for smart planning and design of student housing projects, as well as ensuring its optimized occupancy, rental rates and net operating income (NOI) growth once the project has been completed.
Among other things, a feasibility and market assessment process has to be carried out while planning a new student housing development. Conducting such a study will aid you in gaining an improved understanding of the student population and the competition, which includes both current and projected growth in campus enrollment and housing supply. Even though the primary research can vary for every project, in-person intercept surveys and focus group formats are the processes most commonly used for the purpose of identifying trends, illuminating student housing requirements and preferences, as well as gauging the interest of the students in a housing project. The questions of the research must be designed to highlight market-specific student demographics, as well as psychographics, including financial capacity of students and guarantors, feeder schools, submarkets, degree programs and so on.
The pre-built assessment must include a competitive analysis that addresses the current housing supply, as well as over a two- to three-year outlook. Even though the analysis of current supply is comparatively straightforward, one must take into account the pipeline of possible new student properties present both on- and off-campus, which includes details associated with planned unit mix. On-campus housing outlook can ideally be derived from the strategic plans of varying institutions, including a view toward renovations.
The right amenity packages and unit mix go a long way in increasing leasing velocity and renewal values. Projects developed by well-established companies like Nelson Partners especially are equipped with a host of facilities that can meet the requirements of modern-day students. A competent unit mix must respond to the student demographic that has been articulated through primary research, and subsequently, capitalize on underrepresented floor plans both current and planned within the market. They should also offer varying price points that might appeal to an expansive range of students, including the price conscious ones to those seeking a high-end living experience.