One of the hottest segments of multifamily housing is student housing, an area I have worked in since my earliest days in commercial/investment brokerage. Considered virtually recession-proof, I have watched student housing projects continue to climb in value.
There are few financial setbacks, perhaps only if an owner lets a property become dilapidated or obsolete. Typically, however, student housing annually remains at capacity occupancies because:
1) The economy is bad, therefore students stay in school longer, going back for more degrees or degree work to avoid going into a tough jobs market where salaries are stifled or devolving, or
2) The economy is good, prompting students get in and out of college quickly, moving on to solid job opportunities. Right behind them are younger students wanting to get their education quickly, and grab their own brass ring ASAP.
Student housing is not simply targeted, market-rate apartments. Any apartment developer, or new investor, thinking of jumping into this arena must come to understand that not only is the "lingo" different (we talk about beds, and not units), but designing for people who you know will move out after nine months, or for people who will have roommates that they may not even know, is a process that's not only very different, but sometimes has you scratching your head.
It means considering everything from how the common wall between rooms is constructed in order to ensure privacy, to how several individuals share a single pantry. In a new build you have to think about ways you heat hot water, particularly if four people will be getting ready for the day at the same time, each in his or her own bathroom. It's just different. And, that's just in a single unit.
So how do you retrofit, or design, housing for students? The effort can be challenging. Aesthetically, you want it to feel fresh and forward-looking, like the population it serves. The problem: it needs to serve generations of students and a myriad of changes in taste and preference that accompany them from year to year.
It's important that even though you are designing for students, the buildings don't look childish. Today's students are worldlier and more design savvy than ever before. The focus is less-is-more; simple, clean, adaptable, and, ultimately, timeless. Not timeless in the sense of fitting into some historic mold, but timeless in a way that it's not trendy or edgy or filled with the fad of the moment, on the outside that is.
In this way, we borrow a lot from hospitality design. The exteriors, which are not easily changed, are simple and straightforward with a few flourishes that can be changed with the times. On the interior, assume a remodel every few years. This is important. Students are going to wear it out. So the furnishings, technology, paint and interior materials will push boundaries. They can be fun, of-the-moment and offer the latest in connectivity and comfort.
Students go to college to learn, but equally as important is the collegiate "experience." Strive to create an environment for students that allows them to have the best possible social experience in a setting that is safe and still fosters an academic mission. It needs to speak to the students' sense of fun and adventure, but also to the parents' sense of practicality, security and pocketbook.
We want the student amenity spaces to offer a variety of experiences and levels of community. A ground-floor amenity creates the opportunity for the residents to be a part of the larger community and opens the door for that interaction and integration to occur with a visual and physical connection to the street and nearby campus. Fifty years ago, open spaces allowed students to play cards, or watch that new-fangled contraption, the single TV. Today, students' mobile devices are their up-to-the-second connection to the world. So Wi-Fi is a given, and often the large space may include a handful of private nooks to plug in a tablet/surface or laptop, without heading up to their bedroom.
For high-end developments, incorporating a rooftop pool deck is the latest trend, a more private area for the residents and guests, and offers indoor/outdoor spaces for them to gather and form their own community within the building, while still maintaining visual connectivity to the campus. In addition to the pool, the rooftop deck offers lounge spaces, fire pit chat areas, an expansive sun deck and fitness facilities.
Seem a little out there? It's what students are coming to expect in campus-area multifamily housing, particularly with new builds.
Existing student housing, as long as it is regularly updated to reflect students interests and needs, even without a swimming pool, enables investors to keep rents at the high end of the market. Often students come back to the same bedroom/property year after year.
Remember, as an investor, its not about what you think students' need. Its what they want and are willing to pay for.