By David Nelson, vice president of Carter's student housing group
Elaborate swimming pools, tanning beds, state-of-the-art gyms, ultra-luxurious gathering spaces and deluxe outdoor grilling areas.
These upscale amenities are just a few that developers are providing to accommodate today’s college students.
As an estimated 80 million echo boomers — Americans between the ages of 17 and 31 — continue enrolling in post-secondary education, off-campus living has become a necessity rather than an option. The National Center for Education Statistics states that between 2000 and 2010, college enrollment increased 37 percent — from 15.3 million to 21.0 million — and estimates that it will grow another 10 percent by 2016. While some of those students will continue to rely on on-campus housing, they also have more disposable income and have higher living standards than previous generations.
Additionally, despite growing enrollments, today’s economic climate is crippling funds of both state supported and private colleges and universities; the resources for the additional housing needed to accommodate the demand simply don’t exist. Enter the emergence of off-campus student housing.
This increased demand for student-friendly communities near college campuses has generated new trends in housing development and student lifestyles. Developers entering the space must identify and cater specifically to student requirements in order to achieve and maintain strong occupancies. Students are asking themselves, “Should I take on less debt and live somewhere older with less attractive amenities, or would I rather move into a brand new development, pay slightly more and have amenities that rival a high-end resort?”
Echo boomers would much prefer not to share a bathroom with an entire dorm floor, and so the latter holds true now more than ever. Previously, properties would include modest offerings such as a pool, fitness room and clubhouse. Today, students can enjoy everything from tanning beds to game rooms with ping-pong, shuffleboard and golf simulators. Some complexes even offer spray tanning, manicure/pedicure stations and bocce ball courts.
Pool areas in particular are experiencing a total transformation. The pool has become a community gathering space, with barbecue pits, cabanas, areas with lounge chairs and lazy rivers. Additionally, pools today have doubled or tripled in size, and many developments feature more than one pool. The Highlands, Carter’s 750-bed student housing development at the University of Mississippi, will feature three pools. Other properties under development offer pools with tanning ledges and cabanas, expansive Zumba/Yoga centers and spinning studios.
The asset class is equally as appealing to investors. The stability that stems from demand means that student housing has been able to avoid the high levels of distress seen in other property classes, including retail and hospitality assets. Demand is such that a host of national investors are entering this segment, and we’re seeing an increased amount of institutional capital on both the debt and equity sides. From a short-term perspective, there is market demand that needs to be met. From a long-term perspective, there’s the growing belief that a college degree is necessary to land a good job.
Moreover, with many universities strapped for cash, private financing is becoming more popular. Recently, the University of Kentucky announced that it has selected Education Realty Trust to take over its future student housing construction. The move is bold. By using a private company to finance the construction, the university will be able to finance other necessary developments such as classroom buildings and research facilities. It’s a creative and strategic ploy that universities across the country are eyeing.
The evolution of student housing is upon us. As enrollment hits all time highs, the need for additional student housing will continue to amplify. The successful developers will be the ones that can figure out what students want and how to provide it.
To read the article online, visit the Atlanta Business Chronicle's Real Talk blog.
A site map of Carter's Highland Square projects, which will include three pools.