It’s Taking 'Creative Solutions' to Keep Student Housing Going

Universities are grappling with old housing stock or how enrollment has outpaced the number of beds on campus.

But “creative solutions like public-private partnerships (or P3) can be a mechanism to source capital and deliver new housing more efficiently than traditional university construction approaches,” according to Lindsay Stowell, Executive Vice President, Higher Education, JLL, in prepared remarks.

Public and non-profit institutions make up over 85% of degree-granting institutions in the US, according to JLL.

P3s leverage the respective strengths of educational institutions and the private sector. This model can ease the financial burden on the university and, while complex in their structures, can benefit both parties.

No Better Time to Build

There will never be a “cheaper time to build than now,” Josh Gerken, vice president for Campus Panning, University of Texas San Antonio, said in prepared remarks.

“Construction costs are only going to continue to increase,” he said. “Not doing anything is not necessarily the best answer.”

Converting Nearby Apartments

When in greatest need, schools like Purdue University leased or bought existing buildings close to campus and entered master leases with existing properties proximate to campus.

“They look and feel like residence halls, but they were private apartments,” Rob Wynkoop, vice president for auxiliary services at Purdue, said in prepared statements.

“After several years of leasing beds from one property across the street from campus, we purchased the building, which added more than 800 permanent beds. In the future, we have the option to safely add to the density of this building and significantly increase the occupancy if we choose to.”

Student Housing is Recession-Proof

Teddy Leatherman, Senior Director, Capital Markets, JLL, said in prepared remarks that student housing has emerged from the pandemic as a highly sought-after alternative asset class that is attracting traditional investors as well as new entrants to the space.

“The sector is seen as recession proof, as every lease has a parental guarantee and people tend to go back to school during economic downturns,” Leatherman said.

“Additionally, student housing tends to trade at a premium compared to traditional multi-family so investors aren’t experiencing as much negative leverage.”