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How COVID-19 Will Alter the Evolution of Student Housing

GMH Capital Partners recently acquired The Dean, a 17-story, 672-bed student housing community adjacent to the University of Illinois - Urbana Champaign campus.

By Justin Wybenga, GMH Capital Partners

The economic impact of the COVID-19 pandemic continues to unfold globally, shifting the way we conduct business and go about our day-to-day lives. Across all sectors of commercial real estate, we’ve seen a lot of change, from sanitation measures to limited in-person interactions and occupancy.

The most important lesson from 2020 is the need to be resilient and adapt as the landscape evolves. That’s exactly what we’re seeing in student housing, especially in the Midwest, as owners prepare for next year. Here are four trends we can expect to see in the Midwest student housing sector in 2021 as a result of COVID-19.

Justin Wybenga, GMH Capital Partners

Sanitation, touch-free

COVID-19 has introduced a whole new set of cleaning best practices, and moving forward, residents expect enhanced methods in their communities. To satisfy the new sanitation expectations, we’ve seen owners implement a variety of initiatives, such as installing upgraded air filtration systems and using hospital-grade electrostatic sprayers to sanitize commonly touched surfaces, disinfecting all amenity and common areas on a regular basis, and requiring all staff members to use personal protective equipment (PPE).

Many residents are also looking for convenient contactless or concierge-focused amenities, such as package and food delivery lockers and touchless features. Prior to the pandemic, owners were installing package locker systems and refurbishing buildings with keyless entries, but they have been making significant investments to upgrade amenities with new efficient software like Bluetooth entry for package lockers that has become expected and the norm.

We expect to see many owners infusing new technologies when renovating or building new communities in the future.

International demand

Prior to the pandemic, international students attended American universities in droves, driving increased demand for off-campus housing. Since the onset of COVID-19, Immigration and Customs Enforcement instated new rules regarding the Student and Exchange Visitor Program, essentially limiting the number of foreign exchange students and causing a steep drop in the number of international students this past fall semester.

As a result, there’s been significant pent-up demand from this demographic. As visa restrictions lift, we can expect to see a resurgence of international students attending U.S. institutions. That’s good news for school systems like The University of Illinois, which has the largest international student population among U.S. institutions, and the 12th-largest population of international scholars.

We’re confident that our international student occupancy rates will rebound once restrictions are lifted, since many foreign students are eager to continue their education in close proximity to campus.

Demand for privacy

Right before the fall semester started, we saw an increase in demand and interest for more privacy, personal space and less sharing of bedrooms and bathrooms. The desirability for bed-bath parity is becoming more critical than ever as a result of the pandemic-era trend.

Across all markets, we’ve seen more desirability in studios, micro, and one- and two-bedroom units as opposed to traditional big-group units with up to six friends living in one dwelling. While there is still strong demand for four-bed, four-bath units for friend groups who are comfortable and prefer living with each other, we expect to see fewer five- and six-bedroom units in new developments.

From a square footage perspective, the units have been decreasing in size over the past couple of years. But with students spending more time in their bedrooms, we expect demand for larger rooms and smaller common areas as a result. We’ll have to find the right balance. One thing’s for sure: When institutions transition back to on-campus learning, we’ll see students eager to live more independently and near campus.

Internet connectivity

The fall semester was the benchmark for the new landscape of distance learning, and universities and student housing developers across the nation have anticipated a hybrid learning model for the foreseeable future.

While many operators had already been planning for more remote learning at communities before the pandemic, COVID-19 is accelerating this transition. To create an environment more conducive to online classes, we’ve seen many providers spending capital dollars on improving internet bandwidth designed to support students’ academic and recreational needs.

On average, each student has four to five devices that utilize Wi-Fi, and typical service doesn’t cut it when you have 600 residents in one building. When our residents came back at the beginning of the fall semester, we realized our overall Wi-Fi bandwidth was sufficient on paper but varied from living room to the bedroom. While we initially experienced challenges, we implemented strong and consistent Wi-Fi by adding coverage and network points.

We’ll also start to see more technology-focused amenities, such as full-service business centers with video capabilities, HDMI cords and chargers to provide students the flexibility and accessibility to maximize their learning potential. Moving forward, internet strength will be the number one amenity, and owners are trying to find the best ways to speed up connections and improve coverage.

The way forward

The pandemic has touched the entire globe and will forever alter how people live, work and play. These factors will continue to influence student housing owners across the nation in the long term.

While some real estate players have gone beyond just adapting and are flourishing, others will fade. By acting today, leaders who are willing to pivot to meet new demands will be able to best serve their residents and ensure their own viability as the industry emerges from the current crisis.

Justin Wybenga is vice president of asset services for GMH Capital Partners. This article originally appeared in the November 2020 issue of Heartland Real Estate Business magazine.

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‣ Walker & Dunlop

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