Purpose-built student housing has always been a dynamic market segment with unique challenges and opportunities. As an asset class, student housing fared well during the recent downturn, but the micro-market nature of these developments precludes too many generalizations. What makes a university a strong market for new student housing is in large part due to the dynamics at work in that specific university community. In addition, student housing being developed today reveals a trend toward high-end finishes and lavish amenities.
Hyper-local Market
On a national scale, the student housing market is large and growing. As the recession drove more people back to college, developers began adding new beds to campus communities across the nation. The swelling ranks of college enrollment, even as the job market declined, is one reason student housing continued to provide strong returns in a weak economy.
But within a university community, there is a finite market for off-campus housing. For example, if a university has 20,000 students, one-third may live on-campus and one-third may commute or live in conventional housing. The other third — 6,500 students — in the market for off-campus housing likely represents the total market. If there were already 5,000 beds available, the opportunity for new development would be small.
Similarly, a university that is largely a commuter school could have even more students — perhaps 40,000 — but an even smaller market for student housing.
However, a university community that is growing rapidly, especially one that is attracting an increasing number of students that live too far to commute, may be a market ripe for development of new off-campus housing. This is the case in San Antonio, where three new apartment communities near University of Texas at San Antonio’s (UTSA) main campus also are part of the trend toward amenity-rich student housing.
UTSA Student Housing
One of the biggest factors in the need for new student housing at UTSA is the school’s ability to attract students who are not from the San Antonio area. Largely a commuter school during much of its 45-year history, the ongoing expansion of UTSA’s degree programs and campus facilities has helped make it one of the fastest growing universities in Texas. The recent addition of a Division I college football program only makes the school more attractive to students.
With enrollment approaching 30,000, existing off-campus student housing stock was insufficient. The projects now underway will add approximately 1,800 new beds while providing UTSA students exciting new options for off-campus living.
One of the most notable features of purpose-built off-campus student housing is that every student has a private bedroom, and every bedroom has a private bath. Most new apartments also come fully furnished, many with leather furniture and a large flat-screen television. Wood floors, granite counter tops, stainless steel appliances, and a washer and dryer make these apartments as nice as many homes.
Community amenities are also plentiful and mostly included in the rent. A look at each of the new projects at UTSA highlights the features of a new generation of purpose-built student housing.
Tetro Student Village is located on Babcock Road, just across the Charles West Anderson Loop from the UTSA campus. Developed by Atlanta-based Carter, Tetro offers two- and three-bedroom apartment flats, as well as four-bedroom townhouses with garage parking for two vehicles. Community amenities include a resort-style pool, fitness center, coffee shop, bocce and basketball courts, dog park, fire pits, community WiFi and much more.
Luxx Student Housing is adjacent to campus on UTSA Boulevard and is being developed by NRP Group, based in Cleveland. Luxx will offer one-, two- and four-bedroom apartments marketed as luxury housing. Community amenities include a pool, swim-up bar and 30-person hot tub, numerous outdoor sport and recreation spaces, grilling and fire pits, outdoor movie viewing, fitness center and much more.
Dallas-based Fountain Residential Partners is developing Prado Student Housing, located on UTSA Boulevard at Roadrunner Way. Prado will offer efficiency, one-, two-, three-, four- and five-bedroom apartments with numerous floor plans. Like the other developments, community amenities are plentiful and include an outdoor aqua lounge, fitness center, cyber café and computer center, as well as electronic key systems and free WiFi.
Market Trends
In addition to offering both opportunities and challenges, the purpose-built student housing market is highly competitive, as these new communities demonstrate. UTSA provides an excellent example of a student housing market ready for development due to the ongoing growth of the university and an increase in students from areas other than San Antonio. While local market dynamics continue to be the primary driver of new student housing developments, high-end finishes, furnishings and abundant community amenities characterize student housing today.
— By David Nelson, Senior Vice President of Development, Carter. This article originally appeared in the July 2014 issue of Texas Real Estate Business magazine.