Both on- and off-campus, today’s student housing developments are providing more than just a place for students to rest their heads. Off campus, new communities are featuring everything from fashion boutiques and restaurants, to office and event space, while residence halls are bringing academics to student’s doorsteps with built-in incubator space and classrooms.
While the addition of a mix of uses may seem like the perfect fit for ground floor space, careful planning and consideration is imperative to ensure that the development is a success — especially when it comes to retail.
Choosing The Right Mix
On the development side, successful mixed-use space should begin with thoughtful deliberation. Developers must consider not only the needs of the student population, but the community at large. “At the outset, we evaluate whether there is true retail market demand in locations where we target development,” says JJ Smith, president of CA Student Living. “If there isn’t a sufficient population base, it can be difficult for even the best businesses to survive, much less thrive. We don’t want to force retail in locations that simply don’t make sense.”
Wes Rogers, president and CEO of Landmark Properties, knows firsthand how important careful planning can be when adding retail to a project. “We certainly made some mistakes with our earlier mixed-use projects,” he says. “We did not plan well for loading, grease traps, exhaust ventilation and the appropriate tenant improvement allowance. The local municipality almost always dictates incorporating retail or office space — most codes require some retail on the ground floor.”
“If a mix of uses is required, we now perform a retail market survey and talk to our in-house retail asset manager about its viability,” Rogers continues. “We then will program retail into the project — most often the minimum amount required by code. If your retail only targets the residents in the building, it is likely to fail. You need to target the broader community, as well as your residents.”
Matthew Stein, vice president and director of MSC University, which helps universities and developers/owners execute retail strategies, echoes the need for careful planning when evaluating retail within mixed-use developments and campus environments. “There are challenges and opportunities in all retail environments including higher education communities,” he says. “Vanishing populations create a challenge for operators as it relates to hours of operation, labor models and inventory, but these retail environments also create the opportunity for higher footfall and greater sales during other times of the year. This micro-example is one of the many things to evaluate in the planning of mixed-use and campus-facing retail.”
LINK Prospect Park in Minneapolis features the neighborhood’s only grocery store — a Fresh Thyme location on the ground floor. The property was developed by CA Student Living.
Location is a major piece to the mixed-use puzzle. The development site will often dictate what type of mixed-use will work, or if mixed-use will work at all. Location also has a hand in determining what types of retail might work.
“It all depends on location,” says Jared Everett, managing director of university partnerships at Greystar. “A project deep in the center of campus with no visibility to traditional traffic counts will likely need to be right-sized for support by the campus community alone. A project at the edge of campus or off-campus with exposure to traffic counts and adjacent neighborhoods may be able to support broader community customers and retail could potentially be scaled for that customer segment.”
“The only thing worse than no retail is empty retail space that creates a vacuum on the ground floor of your development,” he continues. “You cannot proceed with an, ‘if you build it, they will come,’ mentality. Having the right amount of mixed-use space is critical, and there should be discipline behind these decisions backed by experience, data and market research.”
Just as mixed-use doesn’t work for every development, one specific type of retail tenant doesn’t succeed in every university market. “There are some types of retail that tend to work better in the niche of higher education retail — fast casual food and beverage, coffee operators, boutique fitness users and daily needs providers,” says Stein. “It all goes back to the basic equation of retailers needing to drive enough revenue to pay their occupancy costs to stay in business with rental rate growth. There is no right retailer that fits into every student housing development and while some campuses act and behave similarly, all university environments are unique and there is rarely a one size fits all solution.”
It’s also important to select retailers that aren’t detrimental to student success, notes Everett of Greystar. The company recently opened a residence hall at Mississippi State University that includes 46,000 square feet of retail and is under construction on a project at California State University – Sacramento that will offer parking facilities, bicycle facilities, a retail component and replacement baseball fields for the city of Sacramento.
“At the University of Connecticut, we have a mixed-use housing project that includes a multi-modal transit center, community plaza, grocery store, primary health facility, pharmacy, office space and faculty/staff housing in addition to the student housing component,” says Everett. “This project truly brings in the community and serves as the main intersection of town and gown. Mixed-use can provide greater activation of the project, enhance the ground floor experience and increase campus connectivity by serving more than just the student residents.”
The Marshall, serving students at the University of Minnesota, was developed by Greystar and features a Target Express location.
In Williamsburg, Virginia, a student housing community serving The College of William & Mary is set to open within the greater development of Midtown Row, and will feature restaurants, retail stores, traditional multifamily apartments, entertainment, office space and a village green and community event space.
CA Student Living is also developing mixed-use projects that serve the community beyond the student population. “While residents of our developments support nearby retail, they can’t be the only customers,” says JJ Smith. “If the neighborhood demand isn’t there, space may sit vacant or become vacant due to a lack of foot traffic.”
Evidence of this discipline can be seen at the company’s LINK Prospect Park development, which features the neighborhood’s only grocery store — a Fresh Thyme location on the ground floor. “The natural food marketplace — representative of our overall corporate wellness strategy — has widely appealed to both our residents and the neighborhood.”
Another development by CA Student Living bridging the gap between serving students and the community at large is RISE at Riverfront Crossings near the University of Iowa. Alongside 600 beds of student housing, the project features a 151-key Hyatt Place hotel, 30,000 square feet of incubator and co-working space for the university and community and 5,000 square feet of retail.
In Atlanta, Peak Campus recently developed Theory West Midtown, a mixed-use community serving students at the Georgia Institute of Technology. “We included 10,500 square feet of retail and 35 retail parking spaces in this project and it has proven to be complimentary to the residential offering,” says Jeff Githens, president of development at Peak Campus. “We are gaining a lot of retailer interest, given the community’s location on a very active commercial corridor in the West Midtown neighborhood of Atlanta.”
“When adding in retail space, it’s important to understand the commercial nature of the site and the associated automobile and foot traffic,” continues Githens. “As for design, allocating space for parking, loading, access control, trash removal and ventilation are key considerations that must be in place to incorporate successful retail. We find that a well-balanced mix of tenants work best.”
Future Development
Student housing developments that feature a mix of uses continue to grow in popularity, with no signs of slowing any time soon. “The benefits of mixed-use when done right are evident,” says Everett. “Many universities are in need of additional campus space and partnering with developers on mixed-use developments can bring the university into the project. Adding a mix of uses can also help activate a campus beyond traditional business hours and provide a reason for students to stay on or near campus after hours. I believe we’ll definitely continue seeing this type of development moving forward.”
JJ Smith of CA Student Living agrees, noting also the importance of flexibility when adding in a mix of uses. “As long as municipalities require retail on main arterial streets in their effort to enhance the pedestrian experience, we will continue to see this trend in urban-infill sites,” he says. “When the spaces remain vacant for many years, it’s a clear — and unfortunate — indication that the market doesn’t support the retail, despite the zoning code requirements, so an alternative strategy may need to be implemented.”
Landmark Properties is another company that builds with flexibility in mind. “We have begun designing many of our retail spaces with the idea of converting them to residential down the road,” says Rogers. “In at least one situation, we’ve been successful in convincing a municipality to allow us to convert dark retail space to more residential after the retail space was dark for an extended period of time.”
Ryan Lang, vice chairman of student housing and multifamily capital markets at Newmark Knight Frank, notes that this flexibility can ultimately be helpful for resale value upon exit. “We will likely continue to see the trend of mixed-use student housing communities grow, particularly in university markets in major metros or within close proximity to downtown or entertainment districts,” he says. “There are some groups that prefer buying with or without retail, but in light of that, we’ve seen many recently developed assets strategically put their retail component into a separate condo deal structure to allow for flexibility upon exit.”
— Katie Sloan
This article originally appeared in the September/October 2019 issue of Student Housing Business magazine.