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 agesof 17 and 31 — continue enrolling in post-secondary education,off-campus living has become a necessity rather than an option. TheNational Center for Education Statistics states that between 2000 and2010, college enrollment increased 37 percent — from 15.3 million to21.0 million — and estimates that it will grow another 10 percent by2016. While some of those students will continue to rely on on-campushousing, they also have more disposable income and have higher livingstandards than previous generations.
Additionally, despite growing enrollments, today’s economic climateis crippling funds of both state supported and private colleges anduniversities; the resources for the additional housing needed toaccommodate the demand simply don’t exist. Enter the emergence ofoff-campus student housing.
This increased demand for student-friendly communities near collegecampuses has generated new trends in housing development and studentlifestyles. Developers entering the space must identify and caterspecifically to student requirements in order to achieve and maintainstrong occupancies. Students are asking themselves, “Should I take onless debt and live somewhere older with less attractive amenities, orwould I rather move into a brand new development, pay slightly more andhave amenities that rival a high-end resort?”
Echo boomers would much prefer not to share a bathroom with an entiredorm 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 fromtanning beds to game rooms with ping-pong, shuffleboard and golfsimulators. Some complexes even offer spray tanning, manicure/pedicurestations and bocce ball courts.
Pool areas in particular are experiencing a total transformation. Thepool has become a community gathering space, with barbecue pits,cabanas, areas with lounge chairs and lazy rivers. Additionally, poolstoday have doubled or tripled in size, and many developments featuremore 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 stabilitythat stems from demand means that student housing has been able to avoidthe high levels of distress seen in other property classes, includingretail and hospitality assets. Demand is such that a host of nationalinvestors are entering this segment, and we’re seeing an increasedamount of institutional capital on both the debt and equity sides. From ashort-term perspective, there is market demand that needs to be met.From a long-term perspective, there’s the growing belief that a collegedegree is necessary to land a good job.
Moreover, with many universities strapped for cash, private financingis becoming more popular. Recently, the University of Kentuckyannounced that it has selected Education Realty Trust to take over itsfuture student housing construction. The move is bold. By using aprivate company to finance the construction, the university will be ableto finance other necessary developments such as classroom buildings andresearch facilities. It’s a creative and strategic ploy thatuniversities across the country are eyeing.
The evolution of student housing is upon us. As enrollment hits alltime highs, the need for additional student housing will continue toamplify. The successful developers will be the ones that can figure outwhat 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.