A new student housing product is arriving on the market: a hybrid of both traditional by-the-bed student housing and conventional by-the-unit apartments for adult professionals. The model isn't surprising, considering some of the challenges with student housing, however, student housing expert Frederick W. Pierce of Pierce Education Properties says that this will likely remain a niche product type, rather than a standard in student housing. In fact the trend isn't being widely adopted.
“There is not much of this going on in terms of new construction or purpose-built student housing –meaning, very few projects are being built with the express intent of it being student housing but having non-student occupants. It is very difficult and complicated to offer by-the-bed leasing at the same time as joint-and-several, by-the-unit leasing,” Pierce tells GlobeSt.com. “The rental rates are often different and so are the lease terms.”
However, there is opportunity, particularly in converting portions of existing apartment buildings. “That being said, there is an enormous inventory of conventional apartments, like those built with a conventional unit mix of studio, one and two bedroom apartments, located near universities that are leased on a joint-and-several basis. Most were built in the 60s, 70s and 80s and are occupied by students,” says Pierce. “The closer these are to a university, the higher the percentage of residents are students. Most all these offer leases that conform to the academic year. This, however, is not considered student housing. These are conventional apartments occupied by students.”
The mixed occupancy doesn't always work. Culturally, adult professionals and students tend to live very different lifestyles and these apartment communities often struggle as a result. “Undergraduate students and professionals do not cohabitate well,” says Pierce. “Students stay up late and like to have a good time. Professionals must get up and go to work. Some young professionals are still yearning for the college life, so may want to still live with students. Most are ready for a career.”
For that reason, Pierce doesn't expect this new niche to take off or become a major category of the student housing business nationally. However, select urban markets could benefit from this strategy. “In those markets, conventional multifamily is a higher and better use than student housing,” he says. “However, there are large student populations. Because of this mixture of residents, there are very few purpose-built student apartment buildings, so students need to live in conventional apartments and pay the requisite higher rents on a per person basis that come with renting studio, one- and two-bedroom units.”
In urban markets the short supply of true student housing and the limited ability to build it actually creates additional demand for conventional apartment units. “If there were an inventory of purpose-built student apartments in these locations, many students would gravitate to those,” says Pierce. “Since there are often very few, if any, purpose-built student apartments at urban universities, students have little choice but to live in conventional apartments building and cohabitate with professional households.”
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Kelsi Maree Borland
