It’s back to school time for most college students. Do they have their noise-cancelling headphones? Check. Their double stainless steel insulated water bottle, “never lose” multiport charger, and laptop backpack? Check, check, and check. Do they have a place to live? Wait a second. Hold up. Didn’t my mom say something about sending a check to…?
This week’s podcast features Fred Pierce, President and CEO of Pierce Education Properties (PEP), who discusses how his business helped pioneer the student housing sector. With an acquisition history of more than 27,000 acquired beds, PEP is a national leader in the business of student housing, ownership, operation, and development.
Fred Pierce, President and CEO, Pierce Education Properties
COVID-19 and Student Housing
- In the Fall of 2020, most universities went to a hybrid model of in-person and online instruction. Despite the pandemic and the housing disruptions it wrought, occupancies off campus were down only 3%. Almost all tenants stayed current with their rents, in part because parents wanted to avoid a hit to their credit.
- Fast forward to Fall 2021 into 2022 and more students are back, occupancies are up, and pre-leasing is up 10% YOY as of July.
- College is a special time and most students will choose to experience “campus life” if able.
- Enrollment outlook is strong, but you have to focus on the right targets. PEP, for instance, works with public universities with 25,000 or more students. Private universities typically have less than 10,000 students and most have university-owned housing.
- Colleges with large undergraduate populations with parents usually footing the bill are also key demand drivers.
- International students are a strong tenant base—they are often from affluent families.
- Students with financial aid or grants usually make good tenants since some or all of their tuition is subsidized.
- Check retention rates too. Lower student retention rates can mean an unstable student housing basis.
Product and Development Shifts
- In the past 10 to 15 years, student housing has become more pedestrian-friendly.
- When land is scarce student housing can be very vertical, and not just in urban centers.
- Complexes with 500–1,000 units are most efficiently managed.
- Since private student housing is not usually on campus, having access to shuttles and buses is key, particularly in cold winter climes.