Purpose-Built Student Housing (PBSH) is a specialized type of housing that has a much different cycle than multi-family housing (MFH) and it can be quite different than what owners coming into this realm of housing are used to. Among the many differences include:
- Mass turnover leading to potentially higher expenses for cleaning/repair
- Higher operating expenses in general including expenses for activities, events, FF&E, and in some cases amenities and their management though often balanced by higher rents
- Higher levels of risk each year related to leasing and turnover
- A need for a semi-structured and facilitated experience for the residents
- Specialized software needs that are either different from MFH or need to be adapted for proper reporting to the ownership
- A business more susceptible to uncontrollable factors such as international conflict, pandemics impacting the institutions, changes in government policy, and economic influences that impact higher education participation and/or ability to ‘go away’ to school impacting the need for housing outside of the family home
Owners and potential investors into PBSH can ease some of this transition by seeking out an operator that specializes in. Even when an owner has an experienced property management team in their vertical, the risk of trying to pound a square peg into a round hole with an operating set up, inexperienced team, and processes that do not fit student housing can create significant problems. Student housing is different in more than just the obvious ways.
It may seem counter-intuitive in an area where the best retention rates are only 2-3 years because students graduate but a focus on retention and the student experience in the building is critical to keeping a building full and building positive word of mouth (including social media). When done well, the students will feel like the PBSH building is a more independent living situation than traditional campus residence but that there are still people in the building that care about them. In most situations it is better to have the students live on campus in their first year for the additional support levels, to become part of the community and build connections. Operators then recruit those students to come to the PBSH building with their friends leading to a better resident experience and students who have an extra year of maturity coming into your building.
Staff in the PBSH building need to be well-versed in the support systems available to the students on the campus. Hiring from the hotel sector and the campus life sector can create a team that is equally well versed in service excellence and student supports/communication which carry more weight as unique skills and knowledge in student housing. Promoting the student experience is more than just parties and ping pong tournaments – it is about establishing the team as people who know how to help students and can keep their eyes open for signs of distress while also taking care of the facility.
Student staff (Ambassadors; Residence Advisors; Residence Assistants…whatever the title) are very important part-time employees who can push the student activities, social media, tours with students and more. It may be a shot to the ego, but students want to hear from someone their age on tours – often a powerful combination can be the Property Manager going on the tour and talking to the parents/family while the Ambassadors talk to the students. Having the student employees lead the tours and social media means a lot of hands on training that is targeted to their age group in its content and presentation style and this specifically means it is not a manual! There may be manuals so there is a written document to refer to but training needs to be targeted to the student generation and that means active learning, rehearsal, review, and involving them in the planning because they are the target audience in addition to being staff. The value of a strong team of Student Ambassadors cannot be understated and for a relatively low cost (each Ambassador is usually only working 10-15 hours per week) there is a great ‘bang for the buck’, employment opportunities for students, and it keeps your operation connected with the campus and what is going on.
The mass turnover can be an issue that catches people off guard who are from traditional property management but for students who come from campus life and staff that come from the hotel sector – a rapid and mass turnover is nothing new. Creating systems for reporting and pre-inspections as well as very intentional communication with students is of key importance. That communication needs to come in ways that students will notice it: email; text; whatsapp; elevator signage; lobby signage; amenity space signage; even chalked sidewalks! Students are bombarded with information and the operator needs to break through the noise to get the important messages to them.
There are some issues that are difficult to plan for but it does highlight the need for any operating team to be able to adapt quickly and anticipate what might be coming. No one knew for sure that Covid-19 was going to happen when it did, but a pandemic plan could have been in place and for most campuses, to some degree, always was in place. It is hard to predict when governments are going to take action or create an environment where international student permits are reduced and/or they are made to feel unwelcome – and – having plans to react that are in place when the typical population is going to change and come up with alternative set ups is key. Any student housing operator needs to have alternative plans to house students if the usual is going to change – shorter term leases for apprenticeships or co-op students and have one room filled for the entire year but with changing students is just one example. Running off of a well-oiled system only works when the situation fits the system.
Student housing is a key element of the real estate sector now. It is not really an ‘alternative asset class’ any more. It is also not “easy” – just because there is a campus nearby does not mean that the operations will be simple or that PBSH is even needed. Each market and micro-market for bigger cities needs to be examined for housing need by people who know what they are talking about. Price sensitivity matters and is often different between typical students of different institutions; some campuses have far more “local” students than others; international and cultural makeup can also have implications. Study the market for students closely and hire an operator that knows student housing. It can be the best decision and business to get into when it is well thought out and the student experience will always be the most important amenity in any building no matter how “luxury” or simple is the building. A focus on the student experience turns every resident into a leasing agent.
