Campus Advantage’s “Ten Steps to Prepare for Your Next Student Housing Development,” serves as an excellent road map for developers who are new to the student housing sector. The article explores everything from identifying feasible development sites to leasing up and stabilizing a newly constructed asset.
Cushman & Wakefield recently spoke to Madison Meier, Vice President at Campus Advantage, about how the 10-step process applies to one of the student housing developer and operator’s newest assets in Gainesville, Florida. The 235-unit, 618-bed property is within walking distance to the University of Florida, and is scheduled to open fall 2020.
Below is part one of our discussion with Ms. Meier, which has been edited for length.
Step 1: Engage a student housing operator to perform a market analysis and feasibility study.
SL: Since Campus Advantage is a student housing operator, I assume this function was performed in-house. Can you elaborate on why this is the essential first step of the process and what market dynamics convinced Campus Advantage to build in Gainesville?
MM: The Market Analysis & Feasibility Study is the essential first step as it allows us to determine the depth of the market. Then we can evaluate what students are looking for in the market, and uncover what the market is lacking, so the development can differentiate itself. In Gainesville, the strong enrollment and projected enrollment growth, along with the current market occupancies and leasing velocity, revealed demand for additional student housing near the university. Newer supply close to campus was preleasing at a rapid rate with minimal concessions, an indicator of the strong demand for new product type in a premier location. Campus Advantage also had prior operating experience in the Gainesville market, which further strengthened our desire to re-enter with a new development.
Step 2: Study the pipeline for future development
SL: What did your research uncover in relation to Gainesville’s on- and off-campus pipeline, and how did this information affect your decision to build a new project?
MM: Like many student housing markets throughout the U.S., Gainesville has a robust off-campus housing pipeline, and it is likely that three other developments will also deliver in 2020. However, the proposed development’s extremely low capture ratio of 1.4%, the university’s projected enrollment growth, and the development’s proximity to campus helped mitigate supply concerns. Plus, there is a secondary source of demand within the market from Santa Fe Community College, so it’s likely the project will attract these full-time students as well. As development supply increases throughout the U.S., our consulting team has evolved from relying on supply/demand metrics to assess project feasibility to instead focus on recommendations to differentiate developments within the marketplace to mitigate lease-up risk.
Step 3: Solicit feedback on your unit mix
SL: What market research was performed to determine the property’s unit mix, and why do you think this unit mix will be successful?
MM: While in Gainesville, the team spoke with undergraduates, graduates and medical students since the development is located near the residency hospital. It was confirmed that a majority of the graduate and medical students were seeking smaller units, either studios, one bedrooms, or two bedrooms. Due to the prime location of the development in relation to classrooms and the Greek houses, it was determined that all student demographics would be targeted, therefore a diverse unit mix ranging from studios to six bedrooms was proposed.
Step 4: Incorporate the operator’s preferred unit layouts
SL: What unit-mix experience in your other complexes helped shape the unit mix in Gainesville?
MM: Campus Advantage has seen success with a mix of 10% one bedrooms, 30% two bedrooms, and 60% four bedrooms. If three, five, or six bedrooms are included, the four-bedroom percentage is typically decreased. When we determined that the Gainesville development would attract all demographics due to the location and amenities, this standard mix was implemented, except for the larger unit percentage was increased slightly due to the high undergraduate population and the lack of five and six bedrooms in the market.
Step 5: Design your amenity space with your operator
SL: What are your overall thoughts on which amenities appeal to today’s students, and are they incorporated into the Gainesville project?
MM: Amenity trends have shifted, and students are now more drawn to amenities that promote socialization, health and wellness, and academic success. Feedback from students in Gainesville indicated an interest in:
- A fitness wing that features a cardio room, free weight room and boxing equipment
- A mini market with fresh snack and drink options
- A coffee bar / lounge for studying
- Study rooms on each floor for private/ small group study sessions
- A pool and courtyard where students can relax or use the furniture to study outdoors
- A pet-friendly environment with a dog park
Stay tuned for Part 2 of this series, which will explore Campus Advantage’s steps 5-10 on how to prepare for you next student housing development.
Madison Meier, Vice President, Campus Advantage
Madison Meier joined Campus Advantage in 2007 in Manhattan, Kansas, at the first property the company acquired. Madison has played an integral part in growing and diversifying the management platform and has established numerous relationships with owners and investors throughout the student housing industry. She has also evolved the consulting division by strengthening the company’s consulting studies with her operational insight and creating deliverables that showcase the extensive industry-wide knowledge and experience within the organization.
Shawn Lubic, Director – Student Housing Capital Markets, Cushman & Wakefield
With 24 years of commercial real estate experience, Shawn is a recognized expert in investment sales brokerage and financial analysis/valuation across all commercial property types. With a specialty in student housing, Shawn has extensive experience in the disposition of investment grade real estate for private and institutional clients on a local, regional and national level.