The coronavirus (COVID-19) is having a widespread impact on the off-campus student housing industry. Many off-campus owners and operators are grappling with a growing number of universities canceling in-person classes, and in some instances, ordering students to vacate their campuses and residence halls altogether.
On Wednesday, March 25, Student Housing Business (SHB) held a complimentary webinar on the impact of COVID-19 on the off-campus student housing industry. The webinar had nearly 2,000 attendees. During the panel discussion, six owners and operators weighed in on best practices and operations advice for employees at both the corporate- and property-level, as well as the potential impact of the pandemic on turn — the student housing industry’s intense summer period when units are cleaned, refurbished and rehabbed — and leasing for fall 2020.
Randy Shearin, editor of SHB, led the discussion. Speakers included Casey Petersen, COO of Peak Campus; Chris Richards, executive director of real estate operations at Greystar; Adam Byrley, COO of The Preiss Co.; Grant Collard, CEO of Redstone Residential; Alex O’Brien, COO of Cardinal Group; and Miles Orth, EVP and COO of Campus Apartments.
One of the overwhelming takeaways of the discussion was that the off-campus student housing sector is banding together in this time of crisis. Leaders across all facets of student housing have been sharing tips and ideas, protocols and policies amongst each other on regularly scheduled teleconference calls to make sure that the industry as a whole is handling this crisis in a uniform manner. And even more fundamentally, operators want to make clear that off-campus properties are open and will remain open, operating as an essential business.
Many owners and operators have closed all shared amenity spaces and suspended resident events in accordance with guidance from the Centers for Disease Control and Prevention (CDC). Visits to units and nonessential maintenance calls have been suspended and multiple companies reported utilizing a two-team, staggered approach for property-level employees to ensure business continuity.
Under this structure, property-level employees are divided into two teams, which work on alternating days of the week to ensure that — should one staff member become ill — the entire staff does not have to be quarantined at once.
Casey Petersen of Peak Campus also reports that the company has closed its office to walk-in traffic, with property tours transitioning to FaceTime and Skype. Peak also has a crisis task force that is meeting daily to discuss best practices as the conditions surrounding the virus continue to change.
Miles Orth of Campus Apartments urged listeners to work with national, state and local multifamily associations — like the National Multifamily Housing Council (NMHC) and the National Apartment Association (NAA) chapters — which have been active thus far and have worked on behalf of the industry to enact positive change and encourage including financial relief efforts in legislation. Panelists also encouraged property owners and managers to reach out to legislative contacts and the local and national level to seek aid for the industry.
How many residents remain in student housing?
With so many colleges and universities canceling in-person classes, a major question on the minds of everyone in the industry is how many students are remaining in off-campus housing? The answer — much like many other aspects of student housing — varies by market and property type.
The majority of participants reported properties to be between 40 and 65 percent occupied. In most cases, 40 to 50 percent of students have relocated, presumably going to live with parents or other family. Adam Byrley of The Preiss Co. noted that some of the company’s value-add communities with lower rent prices had a higher percentage of residents choosing to remain in units rather than relocate.
Communities offering larger, four- and five-bedroom units are experiencing a higher number of vacancies, while properties targeting upperclassmen that offer a larger quantity of studio and one-bedroom units are seeing numbers as high as 95 percent of residents remaining in their community.
To assist students choosing to remain in their off-campus housing, companies like Greystar are offering coloring books, crayons and craft kits to keep students’ spirits up during the doom and gloom moments of the pandemic. Greystar properties are also offering package delivery services that include drop-offs at the resident’s door for students that have remained in their units.
As nonessential maintenance requests continue to be deferred, Peak Campus is sending residents simple maintenance videos with step-by-step tutorials on how to solve common unit requests, like changing lightbulbs. At Campus Apartments, maintenance staff members working off-site have been provided with tablets, which allow technicians to remotely diagnose issues for residents via Zoom.
But will these remaining students be paying rent on time or at all? At many properties, late fees have been waived and evictions are being avoided in the current climate, leaving collections subject to delay.
At Redstone Residential, 65 percent of students are indicating that they will be staying on through the remainder of their lease term and 10 percent of students have moved out completely, with only 3 percent requesting a formal lease termination.
Grant Collard, the company’s CEO, reports that they believe a worst-case scenario estimate would include receiving rent payments from 75 percent of residents. Best case scenario: The company hopes to receive 95 percent of payments in April.
Alex O’Brien of the Cardinal Group notes that it will be important to monitor the decisions being made by universities and colleges for fall classes, as well as summer school, in the coming weeks. This will likely have the greatest impact on June and July occupancy at off-campus properties.
Near-term outlook
When asked about the outlook for the months ahead, speakers were decidedly positive. Student housing communities surrounding Tier One institutions were noted as likely to be even more valuable, with enrollment at these institutions expected to hold steady if not increase.
The COVID-19 situation, and the freeze it has put on all aspects of the economy, could also result in some development projects being shelved, which could help supply/demand metrics in some markets.
Miles Orth of Campus Apartments notes that some university’s quick and rash decisions regarding coronavirus — including rushing students to vacate campus — rubbed students the wrong way, which could lead to more students looking to live off-campus in the years to come.
Speakers also pointed to the recession-resilience nature of the sector, which they expect will put it in good standing coming out of the COVID-19 crisis.
— Katie Sloan