This three-part blog series examines Campus Advantage’s article, “Ten Steps to Prepare for Your Next Student Housing Development,” which serves as an excellent road map for developers who are new to the student housing sector. Campus Advantage’s Vice President, Madison Meier explains how the 10-step process to preparing for your next development applies to the student housing leader’s most recent development project in Gainesville, Florida — Liv+ Gainesville. The 235-unit, 618-bed property is within walking distance to the University of Florida, and is scheduled to open fall 2020.
Part one of this blog series explored Campus Advantage’s recommended first steps of the preparation process, including market feasibility, pipeline analysis, choice of unit mix / layout, and amenity choices. Part two, continues our discussion with Madison Meier and outlines steps 6-8 of the process.
Step 6: Connect with the University during the design phase
SL: When designing your project in Gainesville, what discussions did you have with the University of Florida?
MM: The consulting team worked with the University’s Institutional Research department to confirm enrollment numbers, growth projections, and future on-campus housing plans. Solely relying on research databases for enrollment information often leaves gaps or questions in enrollment projections, so our team speaks to the University directly to fully understand their growth initiatives and how they expect this growth to impact the off-campus student housing market.
Step 7: Know your student demographic
SL: What steps were taken to understand the University of Florida’s student demographic?
MM: Campus Advantage conducts intercept surveys with students both on- and off-campus to gather feedback from a wide range of students. These non-structured interactions allow students to speak more openly about what they are seeking in housing options, reputations of other properties within the market, and their true opinion of a development’s location. Intercept surveys not only uncover market trends and nuances, but also help determine needed amenities to attract the target student body and key differentiators to set the development apart from other competitors.
In addition to the surveys, student demographic information must be analyzed to determine true demand. All feasibility studies focus on:
- Full-time vs. part-time enrollment; part-time students often lead differing lifestyles and may not be consumers of purpose-built student housing
- Student classification; freshman enrollment vs. senior enrollment
- In-state vs. out-of- state enrollment; besides the obvious reason of out-of-state students requiring housing, these students often have the means to pay for premium product
- Average age of the undergraduates to ensure enrollment is a typical student body
- Ethnicity breakdown and international student enrollment
- Financial aid; particularly the number of students receiving Pell Grants, which are awarded based on financial need. This data can point to financial constraints and price sensitivity within the marketplace.
In Gainesville, we also focused on:
- Population of medical students and their average age and marital status
- Student demographics at Santa Fe Community College as a secondary source of demand
- The percentage of students with fraternity/sorority affiliations
- The percentage of students awarded the Bright Futures Scholarship; over 87% of incoming in-state freshman receive this award and will likely live on-campus since the scholarship will cover room and board
Step 8: Develop a realistic operating proforma
SL: I am a numbers guy at heart. Please describe the art of preparing an operating proforma for a building that does not exist yet.
MM: Every operating proforma should always include feedback from a student housing operator. Markets vary drastically in terms of needed marketing spend, staff compensation, and ancillary revenue, so a one-size-fits all approach cannot be relied on. Campus Advantage’s prior operating experience in Gainesville helped shape the operating budget projections, and additional factors were considered such as the robust pipeline, competitive pre-leasing season, and high expectations of residents. The recommended operating proforma included increasing marketing spend to combat the additional supply being delivered the same year, with a large focus on digital marketing strategies and integrated marketing campaigns. Higher compensation for the staff was also considered due to the competitive nature of the market and the need to recruit the best talent to oversee leasing and operations.
Due to its in-fill nature, the development will feature a structured parking garage and will charge for parking, a charge only the closest properties are able to do in this market. Additionally, because of the shifting demand from media consumption via standard cable to more web based over-the-top media outlets, the proposed development will provide increased internet bandwidth and smart TVs allowing residents to access their Netflix, Amazon Prime, and Hulu accounts, rather than pay for cable TV that would go unused.
Thank you, again, to Madison for contributing to this series. Part three of this blog will cover how to create a brand that speaks to your target demographic, how to find the right temporary leasing space, and how to start delivering leasing success.
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
As a member of Cushman & Wakefield’s Student Housing Capital Markets team, Mr. Lubic is responsible for servicing the acquisition and disposition needs of local and regional owners/ developers of student housing throughout the United States. With 24 years of experience in commercial real estate, Mr. Lubic is a recognized expert in investment sales brokerage. Specializing in student housing, he has extensive experience in the disposition of investment grade real estate for private and institutional clients on a local, regional, and national level.