Each year public-private partnership development seems to hit a new milestone within the industry. Universities have come to realize the benefits of leveraging the expertise and funding options available to the private sector in order to create best-in-class, unique residence halls for their students.
While this continues to be true, 2020 has not been a banner year for new development on-campus. To the contrary, requests for proposals have nearly ground to a halt as the COVID-19 pandemic brought unforeseen challenges to university housing departments.
Institutions were no longer focused on finding ways to bolster enrollment with newer, shinier housing projects. In the stead of those considerations came questions as basic as, “how do we allow students back into our residence halls without compromising their safety?”
As universities continue to work on best practices for welcoming students back to campus after winter break, the industry is being held in a ‘wait-and-see’ period, according to Greg Blais, president of RISE: A Real Estate Company. And though the waiting is the hardest part — at least, according to Tom Petty — the student housing industry can take comfort in the fact that students have resolutely proven how much they value the traditional, on-campus experience.
“If the pandemic has taught us anything, it’s that the desire to be part of a community is as strong as ever,” says Jeff Turner, executive vice president at Brailsford & Dunlavey. “Most students and their parents recognize how critical on-campus living and housing are to social development and happiness.”
With students’ still desiring to be on-campus, and institutions wanting to have them on-campus, the momentum for new public-private developments is expected to return as 2021 progresses and the path out of the pandemic becomes more defined.
COVID’s Impact on Development/Design
For the most part, projects already underway at the start of the pandemic were able to move forward without delay. “Generally speaking, we are proud to say that our construction activities moved forward without material delays and resulted in on-time deliveries,” says Jamie Wilhelm, executive vice president of public-private partnerships at American Campus Communities.
“We experienced modest interruptions on a couple of projects where state and local government agencies required COVID-19-related construction stoppage or delays, and some of our predevelopment activities have been impacted as our university partners were focused on developing the necessary infrastructure and implementing the proper protocols to welcome students back to campus this fall,” he continues. “While this has resulted in some temporary suspensions or slows, we expect pre-development and procurement activity to regain momentum after campuses welcome back students for the spring semester.”
And while student wellness has always been top of mind for developers and universities, the COVID-19 pandemic has increased the value of empirically-informed design strategies focused on increasing health, wellness and performance, according to Amy Aponte, vice president at Balfour Beatty Campus Solutions. “Systems that increase outside air, reduce carbon dioxide levels and remove particulates are getting a stronger look due to their value over time,“ she says.
Due in part to heightened attention to student safety, Blais notes that increased demand is being seen for the development of suite-style units in order to accommodate better social distancing. This movement is also accelerating a trend that has been growing in the industry for many years — the shift away from large communal bathrooms.
“The traditional residence hall with community bathrooms has been challenged during the pandemic with many of them having been closed or operated with a significantly lower physical occupancy,” says Wilhelm. “Consumer demand for traditional residence halls with community bathrooms is below that for modern suite-style or apartment configurations.”
“Even prior to COVID-19, unit types were moving away from community-style bathrooms, in favor of in-unit bathrooms for first-year student housing,” echoes Jared Everett, managing director of university partnerships at Greystar. “COVID will likely accelerate this trend. Some schools with high occupancy units — like those housing three students — will likely need to develop additional student housing in order to de-densify, but I am not sure that double-occupancy rooms will ever go away. It is a key tool for offering more affordable housing, and that demand will continue to be a core need for students.”
The shift towards apartment-style units is also being driven by increasing demand for housing that is geared towards upperclassmen, graduate students and even faculty, according to Everett.
“As universities focus on the total cost of attendance and the recruitment and retention of employees, more affordable housing is becoming increasingly important,” he says. “Many leading institutions are implementing programs to not only develop more graduate and employee housing, but also administer employee housing assistance/incentive programs. We are also seeing an increase in other product types such as innovation districts and alumni/emeriti housing.”
This trend towards affordability is being coupled with an increase in the addition of amenities geared towards academic success. “Our partnership universities and student residents are very focused on affordability and value,” says Wilhelm. “We see less demand for highly amenitized community features and increased interest in communities emphasizing academically oriented spaces at affordable student rental rates. One of our university partners noted her students do not need over-the-top amenities and coined the phrase ‘academisize’ to describe the community spaces in her proposed living-learning community.”
Joe Coyle, president of Michaels Student Living, echoes the need for shared spaces that promote academic achievement, adding that on-campus development is poised to see less development of amenity spaces over the next few years. “We’re going to see smaller common area spaces,” he says. “We had been doing larger study space and now we’re doing a larger number of smaller areas where students in groups of four or less can study.”
The value of outdoor space has been proven across all types of commercial real estate during the pandemic, as restrictions on indoor gathering have shuttered restaurants, retail stores and fitness centers across the country. On-campus student housing is no exception, according to Balfour Beatty’s Aponte, who notes that the addition of outdoor amenities and space for gathering outside has increased in demand for universities planning new projects.
“We’re also seeing a large push for career readiness programs — whether it be an entrepreneurial space or dedicated space for local employers,” she continues. “The notion that students might gain employment or mentorship experiences while living on-campus is attractive to parents and students, alike. Many institutions highlight career preparedness in their strategic plans and public-private partners are uniquely positioned to add to the diversity of employment opportunities for students.”
Building for the Future
Though 2020 has seen a slowdown in the number of new developments on-campus, developers believe they are poised to see an uptick in projects as early as spring 2021.
“Today’s volume of on-campus projects is lower due to COVID-19, but I feel that schools will renew their focus on residential projects as soon as they feel comfortable,” says Blais. “Eventually we expect to see the volume of opportunities increase, and I believe this expansion will more than make up for the lull in activity today. Whether funding comes through the bond market or from conventional financing, the capital markets space has enjoyed a long, fruitful history with investing on-campus. We are seeing investment during this pandemic period, which accentuates the fact that the capital markets will be ready when projects resume a normal flow in the — hopefully — near future.”
When looked at opportunisitically, the pandemic is providing universities with a chance to assess their approach to housing and make changes to create the best possible living experience for residents.
“We are having conversations with our university partners regarding what the future modern residence hall should look like, and how to renovate and modernize existing residence halls or replace them altogether,” says Wilhelm. “We expect on-campus, public-private partnership activity to increase as universities act to modernize their housing inventories in response to the student demand for more private accommodations.”
And while the pandemic has been cause for de-densification this year, developers don’t anticipate a long-term impact on amenity spaces or unit structure. The change, more so, will be seen in building systems and the way they are managed.
“While I think COVID will impact some aspects of design, I think the larger impacts will be in building systems like clean air technology, no-touch doors and fixtures, operational changes like more frequent cleaning, more diligent enforcement of room capacities and more use of surface materials that are more easily cleaned/sanitized,” says Everett of Greystar.
— Katie Sloan
This article was originally published in the November/December 2020 issue of Student Housing Business magazine. To subscribe, please click here.