Independent Rental Owners

by Katie Sloan

IROs are alive and well in today’s student housing industry.



Blair Ward
Dwell Trends


Before furnished off-campus student housing became big business in 1995 via Place Properties’ business paradigm, long before an organized national student housing industry began to coalesce at the NMHC conference in 2002, and decades before the first student housing REIT in 2004, student housing independent rental owners (IROs) have been thriving.

Unfortunately, during the inception of the emerging student housing industry a disconnect occurred between it and the older cottage industry of independent student housing rental owners (IROs). Many reasons exist for the off-campus student housing industry being disjointed. Primarily, it is rooted in the hundreds of millions of dollars injected into the market. This created peripheral businesses and industries designed to support the infrastructure of the recently birthed corporate student housing industry. These resources in-turn became developed for the near exclusive benefit of those prominently involved economically.

Within this matrix, IROs are not perceived as stakeholders and thus have been directly bypassed by the industry. Indirectly, our limited access to capital and DNA has contributed to this occurrence. IROs go it alone nature of operating a local student housing business has left us without having the means of organizing or formulating a voice within the era of the national student housing industry. Inadvertently, IROs have further contributed to the out-of-sync dynamic between themselves and the national student housing industry because they tend to approach the environs as professional apartment property managers, rather than as professional student housing operators.

In view of this vast disconnect, we are proclaiming to our colleagues that the independent student housing owner/operator is alive and well. Written for IROs in 2006, the title of Michael Zaransky’s book says it all: “Profit by Investing in Student Housing. Cash in on the Campus Housing Shortage.” Throughout modern collegiate history, IROs have been providing shelter to the millions of residents comprising the 70 percent of college students whom live off-campus.

To hear executives of the top 20 corporate student housing providers and their capital backers spin today’s market conditions, one is made to think that IROs hardly exist, are not profitable, and will be run out of business as a result of consolidation. This is contrary to the fact that 95 percent of the student housing units in the country continue to be supplied by independent student housing rental owners. IROs outnumber the big companies nine to one.

The strength of the IRO is underscored by the sizable contingent, that seemingly appeared out of nowhere, for the initial gathering of the “real national student housing industry” at the National Apartment Association’s (NAA) Inaugural Student Housing Conference and Expo held in 2008. Whereby for the first time, the new corporate student housing industry model was introduced to the base of small scale student housing operators, landlords and apartment owners. By word of mouth, subsequent conferences have experienced a steady increase in IRO attendance.

Regrettably, the majority of student housing IROs aren’t aware that there is a student housing industry, much less that they are part of it by de facto. They remain in the dark. This lack of awareness is exacerbated by the sole emphasis on the major companies and their vendors at industry functions. The driving force of the industry revolves around a handful of large corporations. This reflects the degree of separation from IROs. A positive force for contributing to the overall betterment of the student housing industry has been left out of the equation. Because IROs do not have a seat at the table they have been absent from ensuing discussions about the future of student housing.

Outside of student housing industry circles, the use of the term IRO implies real estate professionalism, pride of ownership, political clout and providing a vital service to the community. In the realm of the national student housing industry this is not the case. Nevertheless, the IRO community is thankful for the creation of an industry where once, there wasn’t one. IROs now feel like they are part of something bigger than just running their family businesses in isolation.

This newly structured industry has yet to have the final chapters written. IROs will remain a permanent component of it due to the same demand for supply side diversity which has allowed multi-hundred bed facilities to experience ongoing success. College students will continue to want a variety of housing options. IRO properties are irreplaceable in meeting the demand for student rental housing stock and the building of behemoth complexes will not necessarily supplant them.

Hopefully this article will be the start of a two-way dialogue. With a fresh perspective, we can begin to learn from each other. Applying a philosophy of “what we can learn from you,” national firms can tap into the passion that IROs have for student housing and their entrepreneurial spirit.

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