From an interesting piece in Multifamily Executive about the evolution of the student housing market over the last 20 years:
The latest generation of student housing mirrors the sophistication and diversity of its consumer base.
Every college and university market, demographic base, and site selection context is incredibly varied and the demands of that student population are equally as diverse. Students at an urban liberal arts school with a cost of $52,000 per annum have very different wants, needs, and resources than those at a large suburban state-sponsored engineering and agricultural school…
Those who blindly develop with a “build it and they will come attitude” will suffer like those properties near the University of Denver, or near WVU, or in Minneapolis that only generated 40 percent to 70 percent of projected income in the first year because they did not have specific market knowledge and did not tailor the assets to consumer demands. Targeted development execution with on-the-ground market reconnaissance and due diligence is what will be successful in the coming years.
A developer that builds on a site simply because it is zoned and/or builds what was successful two or three years ago in a different market with a different consumer base will not see the same success, as the student market is the fastest adopting consumer in the housing segment. The product you are delivering to the marketplace today is becoming obsolete as quickly as the student’s phones, computers, and media.
For those of us old enough to remember student housing options being:
B. Greek House
C. On-campus apartment
D. Motel converted to apartment
E. Barely standing 60-year-old house converted to student apartments
all of this is a revelation.