Maximizing Space is Paramount as Costs Soar for Developers, Students

by Katie Sloan

Everyone is feeling the pinch from interest rates and inflation, including student housing developers and the residents they must pass some of those costs onto. 

“The escalating cost of construction presents a unique challenge in student housing as there are a finite number of prospective residents that can afford to pay the premium rates that new development commands,” says Ken Carl, senior managing director of student housing and multifamily at Kayne Anderson Real Estate. 

For some development teams, this means adding more residences to spread out the costs. 

“Developers have needed to get more creative in designing unit floorplans and shared spaces, and we are certainly observing a trend toward much larger, denser projects being delivered,” Carl continues. 

Development Optimized

Dan Goldberg, president at Core Spaces, says his company is embracing this trend. 

“There is a consolidation happening in the off-campus space; we’re moving toward fewer developers that are focused on larger-scale projects,” he notes. “But we’re currently developing multiple 1,000-plus bed projects across the country, and we’ve continued to build a pipeline of these larger projects.”

This includes Hub Knoxville, a nearly 2,000-bed project near the University of Tennessee. This is the largest student housing development in Knoxville, and the largest in Core Spaces’ history, according to Goldberg. The project will feature three towers, including two 10-story buildings and one seven-story building, with a total of about 600 units. It will also feature an estimated 30,000 square feet of retail space and a roughly 1,800-stall parking garage. 

Construction on Hub Knoxville began in spring 2023. The project is slated to deliver in phases beginning in fall 2025 and extending into 2026. Schenk Realty and Kayne Anderson are development partners on the project. 

Andy Barfield, managing director and head of development at Holder Properties, sees this trend sticking around — at least as long as current economic challenges persist. 

“Due to inflation and low unemployment, rising material and labor costs continue to heavily impact the ability to underwrite a new development,” he explains. “Therefore, maximizing density and utilizing economies of scale is a major focus in helping to combat the rising cost of development.” 

Higher materials costs have ushered in a second trend, Barfield notes.

“Modular construction is also becoming more mainstream due to the increase in building material manufacturing plants throughout our markets,” he continues. “Modular construction reduces the need for on-site labor, accelerates build times and drastically reduces the impact of inclement weather on a development.”

Holder Properties is utilizing a modular design/construction approach on 737 Gadsden at the University of South Carolina in Columbia. The 11-story, 938-bed project just broke ground on a 3.75-acre site and is expected to house second- through fourth-year students when it opens for the fall 2025 school year. 

Barfield believes this type of construction and density is well suited for a campus proximate project like 737 Gadsden, located at an institution like the University of South Carolina, which is growing its enrollment and is a Power Five conference.. 

Darrell Whatley, vice president and senior project manager at Kirksey Architecture, thinks the age of students can be an important factor when designing these properties. That’s because freshmen, sophomores, juniors and seniors often have different requirements when it comes to their living situations.

“Freshmen typically require less space and need more opportunities for social engagement,” he explains. “In this scenario, a suitable option would be a facility designed to meet our ‘path-of-travel’ philosophy, which is the belief students must pass through social and amenity spaces to reach their individual rooms. This concept casually encourages students to interact in communal, open spaces rather than retreating to their rooms. In contrast, graduate students typically desire more space.”

A desire for privacy is another reason many newer developments now contain more units, notes Jared Hutter, principal and co-founder of Aptitude Development. 

“Students are increasingly demanding more privacy, with more and more renters gravitating toward lower-occupancy units,” he says. “This puts pressure on developers to fit more units into a building while still making financial sense for the investment group.”

Barfield adds this trend is particularly prevalent in off-campus housing. 

“Smaller, micro-apartment-style units that still have the privacy that a one-to-one bed-bath parity offers — with reduced living and kitchen spaces to drive down cost — will continue to be a focal point in student housing design,” he says.

Of course, the benefits of the micro trend can be seen by on-campus developers as well. Such is the case at UFORA at the University of Florida in Gainesville, a joint venture between Kayne Anderson and Alta Terra that will be opening for the fall 2023 school year. 

The eight-story building contains 232 units and 663 bedrooms. UFORA’s configuration features a “pod” of eight micro units in an eight-by-eight floorplan.

“The micro-unit floorplan has a larger bedroom and common space when compared to the traditional four-by-four layout,” Carl says. “This allows a micro-unit floorplan to offer students a studio with a private living room, bathroom and kitchenette, along with a shared common space, creating a compelling mix of private space, while encouraging social connection.”

Thoughtfully Designed Spaces

Gen Z’s emphasis on sustainability and wellness has spurred two more design trends in student housing developments. 

“Mass timber student housing projects and biophilic design are increasingly becoming more popular,” Whatley says. “With more universities setting aggressive sustainability goals, including achieving carbon neutrality, we expect to continue to see a surge in mass timber buildings on college campuses. The added benefit that mass timber and biophilic design brings to student housing is the refreshing and nature-inspired environment surrounding its residents.”

Kirksey recently worked on the 166-bed Hanszen College Wing at Rice University in Houston, which became the first on-campus collegiate residential mass timber building in the state of Texas. The new 57,500-square-foot residence is constructed from Southern Yellow Pine. Whatley notes the design team made a conscious effort to leave as much of the wood exposed within the building, igniting a strong sense of biophilic design within the residences and public spaces. 

“This improvement to the campus will elevate the housing conditions in terms of accessibility, daylighting and comfort,” he says. “And it puts Rice University one step closer to achieving its goal of operating as a carbon-neutral campus by 2028.”

Developers are also taking cues from the hospitality sector. 

“Something we’re seeing more and more is designing interior spaces that are more like hospitality spaces than residential in terms of finishes, fixtures, seating, and overall flow and functionality,” Goldberg says. “We’re moving away from segmented amenity spaces, and instead creating open spaces that can be used in a variety of ways throughout the day — grabbing coffee in the morning, studying in the afternoon and hanging out with friends in the evening.”

Goldberg notes this change in amenity space is due to a change in students’ preferences. 

“What they value has changed, and that’s being reflected in how we’re designing and programming our spaces,” he continues. “Instead of offering the flashier amenities that take up space — like golf simulators or game rooms — we’re maximizing the usefulness of those spaces and offering more room for our residents to study and socialize, and to take care of their physical and mental health and wellness.”

Hub Knoxville, for example, will offer private study rooms, a coffee shop, and a spa and fitness center, among other amenities. 

Smaller units also result in more square footage for amenity space, Hutter notes. The Marshall at Rochester, a 494-bed student housing community near the Rochester Institute of Technology in upstate New York, offers a three-story clubhouse and gym. It was the largest structure of its kind that Aptitude has built to date, according to Hutter.

“Seeing the reaction from tenants as they tour the completed project has given us many ideas for future developments,” he says. “We will try to continue to replicate the excitement that tenants feel when they walk in.”

The Marshall at Rochester is opening for the fall 2023 school year. 

Emphasizing a unique or special element of the project is also a popular trend nowadays. One that is made easier, Goldberg says, when you have the space and funds to do so.

“Larger projects not only allow us to bring more beds and diverse unit mixes to market, but this economy of scale allows us to create really special buildings,” he says. “This extends from exterior architecture that becomes a fixture in the local community all the way down to the quality of finishes we’re using to show that extra level of attention to detail for our residents.”

Whatley notes these memorable details can be added into new or renovated projects. Kirksey is currently working with Baylor University in Waco, Texas, to preserve and update Collins Hall, a 450-bed, all-female residence hall for first-year students. The hall dates back to 1957, giving Kirksey a rich history to work with.

“To maintain the legacy left behind by alumni, former residents were encouraged to share their favorite memories from their time living in Collins Hall,” he says. “These submissions were then carved into individual bricks that will pave the way for the next generation of Baylor women who will call the residence home.”

On the opposite end of the scale, the latest technologies are also appreciated in today’s student housing developments. 

“Technology is ever evolving and improving, certainly making student’s lives easier in some respects,” says Greg Blais, president of RISE. “Smart technology in common areas, for example, is changing how study rooms are used.”

David Pierce, principal at Parallel, sees this trend extending into the units as well.

“Everything that can be smart in the units is smart in the units,” he says. 

Pierce notes cable is a thing of the past, as students favor high-speed internet and smart TVs, or watching content from their phones, laptops or tablets. Many developers are also incorporating smart locks, thermostats and lighting. 

The desire to create more content and enjoy personalized health and wellness services also has developers rethinking their amenities. 

“Social media and podcast rooms are becoming more and more prevalent,” Barfield says. “The generation that is currently in higher education, and those who are coming up behind them, are consistently looking at ways to build their individual brand. Their ability to share and post content easily to multiple social media platforms will continue to be a popular addition to student housing developments.”

Barfield further states that high-end, tech-savvy fitness amenities are also at the top of students’ lists. 

“High-end fitness, like HIIT circuit training and Peloton bikes, is one of the first amenities we focus on within our developments,” he says. “Our residents look for convenience as it relates to fitness options to provide opportunities to step away from a rigorous study schedule.”

Regardless of the next big trends, Blais expects to see more student housing development, both on and off campus, thanks to the industry’s growth.

“By all appearances, universities are enjoying a growth trajectory rebounding from the COVID-impacted years,” he says. “Larger-than-normal freshmen classes are creating the need for additional on-campus student housing.  There is an increasing velocity of solicitations coming from universities requesting new housing to support this growth. From an off-campus perspective, highly amenitized, locationally advantaged projects are being built at Power Five schools, but at a slightly slower pace than before.  I would expect velocity to increase as capital costs reduce and debt becomes more available.”

Nellie Day

This article was originally published in the July/August issue of Student Housing Business magazine.

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