Nelson Partners Talks About Strategies for Smart Student Housing Development

Smart Student Housing Development


Student housing has today emerged as one of the smartest and most profitable investment options for a wide range of real estate investors and developers, owing to the growth of the student housing sector over the last decade. A number of well-established companies are currently a part of this sector, including Nelson Partners. However, as the student housing industry is progressing towards being mainstream, it is also getting more competitive. The supply in the key markets is increasing as new operators and investors enter the space. This creates a challenge for developers, who must explore ways to stand out in order to ensure strong leasing for new properties.

Student housing development has strongly shifted towards campus neighborhoods. Ground leases and assemblages are more common in this environment, and leads to an increase in costs to the developers. Thorough early-phase market assessment has become quite vital to smart planning and design, so as to support optimal occupancy and rental rates once the project has completed development.

A feasibility and market assessment must be the very first step for the developers when planning any new student housing project. Such a study will help them to gain a good understanding of the student population, the major competitors, as well as current and projected growth for campus enrollment and housing supply. Even though the primary research might vary, focus group formats and in-person intercept surveys are commonly recommended for the purpose of identifying the trends, illuminating student housing needs and preferences, as well as gauging student interest in the project. Research questions must be designed to put emphasis on market specific student demographics and psychographics like feeder schools, submarkets, degree programs, as well as the financial capacity of students and guarantors. If a person is not sure to how to facilitate the research process, they can always hire a consultant with student housing experience. The pre-build assessment must also feature a competitive analysis that addresses the current accommodation supply, and includes the prospects for future supply over a span of two- to three-years.

Subsequent to the market assessment, one must dwell on the type of amenities and facilities to be provided at the student housing unit. Nelson Partners and similarly renowned developers put emphasis on developing properties that are equipped with a wide variety of conveniences that truly manages to delight the student. Having the right accommodation unit and amenity package mix will help boost the initial leasing velocity, accelerate the resale value, and level up the renewal rate. A successful unit mix typically responds to the student demographic and pays heed to their specific needs.  Property owners must try to provide varying price points for the accommodation, so that they are able to appeal to a large group of students, right from the ones seeking a high-end living experience to more budget conscious individuals. The property must also respond to certain market-specific layout needs, which include extra bike storage, sporting equipment space, or study rooms.

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