Student Housing Names Address Multifamily Audience

by Katie Sloan

Atlanta — Broker, architect and developers debated highs and lows of the student sector at the InterFace Multifamily Southeast conference.

From left, Manson, Bolton, Rogers and
Taylor. Riley not pictured.
— A panel representing some of the most-often-heard names in student housing development, brokerage and architecture took the stage to present and debate this niche sector of commercial real estate to a group of multifamily leaders gathered for the 4th Annual InterFace Multifamily Southeast conference held in Atlanta Dec. 4 to Dec. 5.

Troy Manson, managing director with HFF, moderated, leading a discussion with Mark Riley, development director with Inland American Communities; Wes Rogers, president and CEO of Landmark Properties; Niles Bolton, chairman and CEO of Niles Bolton Associates; and Scott Taylor, president of Carter.

Manson asked the panel to describe the primary differences between conventional multifamily housing and student developments. Unanimously, all agreed that student projects are more expensive to build than traditional apartments, due to the heavy emphasis on elaborate amenities, including rooftop pools, fitness centers that rival the most decked-out local gyms and principally, Internet service that at some properties is as advanced as it can possibly be in a residential environment. Parking also adds to development costs, the panel explained, particularly in the South, where each resident of an apartment is usually bringing a car to college. Lastly, the bed-to-bath parity, Bolton added, means a heavier concentration of fixtures in each unit than in a typical multifamily environment, which can also be a factor that drives up costs.

Manson asked panelists to comment on the time-sensitive nature of developing student housing and said 2013 witnessed the largest number of late deliveries of new projects. “This business is like a cruise ship,” he said. “Once the school year starts, the ship has sailed, and you’ll be putting students up in hotel rooms.” Rogers commented that he plans his developments — which began as single-family-home style communities and are branching into urban-loft style projects — up to five years out. Rogers has long espoused “product differentiation,” and is further setting apart Landmark’s developments by adding premium units to the firm’s newer projects. These units include built-in pool tables and wrap-around patios, among other features.

From the management perspective, the speakers discussed the pressure on having to “turn beds,” usually about 70 percent of them, Rogers said, twice per year. “If you’re thinking of crossing over,” Rogers told the audience, “I urge you to hire a student housing management company.”

Taylor pointed toward a trend that’s gaining speed in both student and conventional multifamily: building pedestrian-friendly urban projects. “We like to be as near to campus as we possibly can be,” he said. “And in the conventional space, we like to build where people can walk to work and to shopping.”

Manson questioned what some of the biggest missteps have been in the sector in recent years. Rogers responded, saying some pro formas have been unrealistic, causing a few foreclosures. Rogers noted one in San Marcos, Texas, that the field’s largest REIT, American Campus Communities, has repositioned. Overbuilding was also tied into the industry’s biggest challenges at the moment. Some of these challenges have caused some stocks to dip slightly and REITs, at the moment, tend to be on the sidelines a bit as acquirers, Riley said. But pension fund buyers have come looking in higher numbers, Rogers added, because they are all-cash buyers with slightly less sensitivity to interest rates as other buyers may be. Landmark currently has a $325 million portfolio on the market.

Bolton noted how many student housing projects are being acquired before they are even built, as “paper versions,” he called them. “That speaks to the amount of capital trying to get at this phenomenal product,” Manson replied. “It is a very robust market.”

— Lynn Peisner

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