As the school year approaches, it’s time to get an education on one of the growing sectors in the housing market—student housing!
With college enrollment rates rising over 30% in the last 20 years, and another 2.3 million students projected to matriculate over the next 10 years, colleges are forced to accommodate more students than ever before. The upshot in enrollment has driven college tuition costs up as well, as much as 21% at some public universities.
However, rising tuition fees are not the only growing costs for prospective students. Room and board charges are a silent killer, increasing at rates equal to or even greater than tuition fees. At the New School in New York, room and board costs $18,490—that’s more than the cost of tuition at many public colleges.
In an attempt to offset these charges, many students are choosing to move off-campus at some point during their four years—on average, between 30-60% of students.
The demand for off-campus housing has propelled the growth of the student housing market, creating a new line of residential apartments catered especially towards college and graduate students.
The New York Times calls the student-housing sector a market with “growth prospects, steady revenue stream from rents and comparatively high capitalization rates.” This sector has a lot of potential for any property managers looking to expand their holdings, especially for those located in a college town area.
So what do you need to know to break into this golden market?
The struggle to appeal to college students has shaped the design of these new apartments. Many developers are turning towards expansive amenity offerings to attract students, marketed as a place to ‘unwind and relax’ after a long day of hitting the books. Off-campus complexes have begun featuring luxuries previously unheard of in a college housing environment: pools and lounge spaces, as well as game rooms, theaters, and state-of-the-art fitness centers. Some truly extravagant facilities even offer tanning salons, full-swing golf simulators, and Friday night pool parties (D.J. and free food included, of course).
While amenities to that extent may not be necessary, the appearance of this trend in student housing demonstrates the desire of modern college students to have a comfortable and social life. Developers are increasingly attempting to outdo their competitors by having the best amenities, which is definitely a significant point to consider for anyone trying to enter the market.
Additionally, because of the social nature of today’s college students, a pattern amongst student residential halls is an increased focus on common areas. Modern common areas double as lounges and study spaces for students, so expect to see many design concepts featuring not only standard desks and chairs, but also plush sofas, ping-pong tables, and sleek kitchen and laundry spaces. Investing in creating vibrant common areas can help foster a sense of community, a valuable selling point to students.
Finally, the incorporation of technology into living spaces is now ubiquitous, and especially important for those attempting to cater to the millennial generation. High-speed Wi-Fi connectivity is practically a must-have, for students who are dependent on their iPhones and laptops for both academia and social life. Smart-technology may also be a worthwhile investment, as it can serve as both an added perk for students and a cost-saver for property managers.
The rising college student population and their continued demand for off-campus housing makes the student housing sector a competitive market with a solid future. Judging from the strength of the student housing market, it might be time to head back to college—and take some buildings with you!