InterFace Student Housing Conference Brings 1,200 Student Housing Executives to Austin
A cocktail reception followed the late afternoon roundtables, where attendees were able to continue to build new relationships and explore a variety of booths from exhibitors.
A Record Breaking Year
After a networking breakfast and workshop, the conference’s panel sessions picked up Thursday morning with a consortium of CEOs from the industry’s top companies in a “Power Panel.” Moderator Peter Katz, executive director of Institutional Property Advisors, kicked off the discussion by noting that “unprecedented times” are the two words that come to mind when you think about the current state of the student housing industry.
“We’ve experienced a transactional high in the history of student housing,” said Katz. “The student housing track record in transactional sales in 2015 was north of $5.5 billion — a more than 40 percent increase over the previous two years. The industry has come to the forefront of everyone’s minds as a result.”
“These are great times in student housing, and capital markets and the broader institutional markets are all realizing what we have known for a long time in this room — student housing offers the best risk-adjusted return in almost any sector of real estate,” said Bill Bayless, president and CEO of American Campus Communities, the largest owner and operator in the sector. “Two factors have led to that realization. We have finally hit a point with better transparency, which has given people the data points to understand just how solid of an investment student housing is. The other thing that goes hand in hand with transparency is the actual, proven track record of performance.”
Randy Churchey, CEO of EdR, pointed out that there is a great deal of liquidity in the marketplace and an influx of non-student housing investors joining the investor ranks due to successful third-party management.
“There’s a lot of new capital that is entering the space,” said Wes Rogers, president and CEO of Landmark Properties. “Where we are in the economic cycle, investors saw how well the EdRs and ACCs of the world performed in the last recession, and think student housing is a great place to put their money.”
Each CEO noted heavy pre-leasing for the 2016-2017 academic year across their student housing portfolios. These levels were attributed to everything from great retention, to successful marketing efforts and the lay of the land in terms of what’s on the market.
The panel expects cap rates on investment sales in the sector to remain unchanged during the next 12 months. “The total volume for last year was just under $5 billion, and I think it’s going to match that in 2016,” said Churchey. “The volume of assets on the market across all classes is very robust. With that, there’s plenty of equity chasing those deals, so I believe cap rates are going to remain the same. It should be a great transaction market.”
For development and acquisitions in top tier markets with robust pipelines, David Selznick, CIO of Kayne Anderson Real Estate Advisors, who is heavily invested in the sector, noted that it is imperative to have a longer-term view for success in this business. “It’s expensive to be ground zero,” said Selznick. “If you go long, you can afford to pay the pricing that’s required to be in a new build close to these flagship universities.”
The panel then shifted to the topic of renovations and how to keep assets competitive in the marketplace. Across the board, it was noted to be imperative to keep a read on the wants and needs of each submarket. “I think you’ve got to know your comps and know what the market is,” said David Adelman, president and CEO of Campus Apartments. “When we buy assets that need renovations, we’re looking at our competitors and assessing their value proposition and their price points. We look at what we can do to get people excited, like coming in at a slightly lower price point or using vinyl plank flooring. We focus on the curb appeal renovations that speak wow. It’s important to look at what you can do within an asset to keep a price point that’s attractive while maintaining the level of amenities you need to attract residents.”
“I think this is exactly why you want to buy near a tier one university,” said Rob Bronstein, president of The Scion Group. “At a big, flagship institution, buildings will have many lives. Every five, seven or eight years it’s going to make a lot of sense to pump some capital into it. Because the institution is large, you have a deep well of students to tap into with all sorts of levels of affluence.”
The panel all believed that branding, surveying the student population and managing high quality product were all imperative in maintaining strong leasing. “We’ve just undergone a three-year branding research and re-branding initiative,” said Bayless. “What we’ve found is that students — when they’re searching for housing in a particular market — know the names of the communities. They know where they want to live, and that’s directly what they’re searching on Google. We vary our branding at a property level and we don’t believe in standard products. We do product variation to garner success in each local market.”
Technology upgrades were overwhelming lauded as a top priority in student housing today. “With gamers and the over-usage of the Internet, I think it’s an imperative for you all — if you’re going to be buying or building — you have to include fiber at the highest speed possible in a given market,” said Selznick.
Overall, the outlook for the sector was bright. Capital is expected to continue to keep flowing in and development is expected to continue to boom.
After a brief break for attendees to network with colleagues and potential partners, attendees moved into concurrent sessions on a range of industry-specific topics. From “Development: What’s Being Built, Where, and is a Second Development Boom Coming in 2017-2019?” to “Beyond the Bandwidth Conundrum — Case Studies in Successful Technology Deployment” and “Leasing & Marketing: What’s the Outlook for 2016-2017,” sessions offered a broad spectrum of topics to appeal to all attendees.
After a luncheon that found attendees catching up and forging new business deals, a general session was held in the Hilton Grand Ballroom to discuss “The State of the Industry and 2016-2017 Outlook,” moderated by Dorothy Jackman, managing director of the national student housing group at Colliers International.
Panelists included a range of industry experts, with Justin Gronlie, vice president at Harrison Street Real Estate Capital; Joe Coyle, president of University Student Living; Donna Preiss, founder and CEO of The Preiss Co.; Gary Holloway, president of GMH Capital Partners; and Peter Stelian, CEO and founder of Blue Vista Capital Management.
The panel all reported solid pre-leasing, a focus on core, close-to-campus product and the need to be incredibly selective when choosing new assets. The importance of keeping up with the times technologically continued to be emphasized, proving that students and Internet share an unbreakable bond.
Sessions continued through the afternoon on topics ranging from economic uncertainty in the CMBS market to putting the “value” in value-add and balancing the demand for live-learn, socialization and amenities in architecture in design.
Innovator Awards Shine Light on Exceptional Programs and Projects
Later on, Student Housing Business presented its Innovator Awards to companies for excellence in student housing development. Voted on by a panel of 88 industry experts, 23 awards were presented for everything from best off-campus development to best architecture and design and best renovation of existing university housing. Winners included Aspen Heights, Gilbane Development, EdR, CA Student Living, Vesper Holdings, American Campus Communities, Core Spaces and more.
Capstone Development took home an unprecedented three on-campus awards — including Best New Development — for its Cornish Commons project at Cornish College for the Arts and City University of Seattle. ACC took home five Innovators this year; the most of any one company in 2016. The winner of the coveted Off-campus award for Best New Development of more than 300 beds was The Preston Partnership and South City Development Partners for Square on Fifth, a recently opened project near Georgia Tech in Atlanta.
The conference continued Friday morning with more panel sessions and networking, and concluded shortly after noon. The 8th annual InterFace Student Housing Conference brought together student housing developers, contractors, managers, operators, industry suppliers and more, and gave them a platform to discuss and learn about a robust industry that is in a state that some have compared to a “perfect storm.” Student Housing Business and InterFace Conference Group would like to thank our attendees, sponsors, speakers and moderators for making InterFace Student Housing 2016 a resounding success.