Why Experts Expect Challenges Pricing Student Housing

Student housing operates on its own field. Unlike traditional apartments, student housing has a leasing schedule set by the academic calendar and is priced per bed, not per unit. These details will make pricing student housing assets more challenging through the economic dislocation caused by the coronavirus pandemic, compared to traditional apartments.

“Most property management systems are designed for the conventional apartment market and do not take the anomalies of student housing into consideration,” Jake Jarman, COO for Redstone Residential, tells GlobeSt.com. “We lease by the bed rather than by the unit and have an entirely different leasing season – one that correlates with the academic school year. At current, it is difficult to be agile with pricing. Another challenge we see as we are setting yearly budgets is we don’t necessarily have the pricing information of our competitors during the rate-setting process.”

Already, university systems are announcing online classes for the fall semester. In California, the University of California system and the California State University system, for example, have already announced distance-education for fall 2020. “Like all industries, student housing will have to adjust to factors beyond our control for a little while,” says Jarman. “The situation remains fluid. Many decisions as to when students can safely come back are still in the making and will depend on the ebb and flow of the pandemic timeline. What is encouraging is that school will resume in full capacity at some point—it’s just a matter of when.”

Jarman’s advice is to track the situation closely and often. “This will be a challenging situation and one that should be modified on a weekly basis,” he says. “General advice would be to utilize as much data as possible to assist in the decision-making process. Gather as many solid metrics as possible regarding leasing trends, lead volume, verification numbers, concessions, and anything else that will help arrive at an astute price point.”

In the interim, student housing players should leverage new technologies. “Fortunately, some property management systems, like Entrata, are adapting to the unique needs of the student sector and tailoring their platforms accordingly,” says Jarman. “Better student-specific market data and technology that accurately projects the by-the-bed pricing model are certainly needed. Additionally, data integrity with regard to the impact of community fees, short-term leases and concessions is invaluable when trying to effectively price.”