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December 8, 2021 by: Gabriel

Modern Issues in Student Housing – Nelson Partners

In the United States, there are 10 million students enrolled in 4-year colleges and universities, half of whom live on campus. In addition to full-time residents, some commuters attend classes regularly but do not have room assignments through the institution. While commuter students account for more than 60% of students attending 4-year colleges and universities, only 11% typically live off-campus.

According to the latest estimates from Nelson Partners, there are 1.8 million full-time students who are enrolled in 2- or 4-year higher education institutions living on campus with approximately 0.5 million commuters. Similarly, approximately 2.5 million full-time community college students are living on campus, with 1.2 million commuters. Unfortunately, the opportunity for homeownership is limited in this market because many colleges and universities do not have off-campus housing readily available to their commuter student population.

The facility types vary significantly by market conditions, size of the institution, and other factors. There may be a significant number of traditional residence halls in some markets, while in others, many institutions have shifted to suite-style or apartment-style accommodations. The vast majority of the on-campus student housing appears to be operated by public institutions with limited service amenities such as full kitchens and laundry rooms. Private schools offer more upscale accommodations with larger room sizes, multiple bathrooms per unit, and other “luxuries” that appeal to the students.

Most institutions lease their student housing facilities to third parties who then charge an average monthly rate for double occupancy (two students per room). The rates are usually close to, but often higher than, the average rents for traditional apartment rentals in the same market. For example, according to CBRE’s 2015 Student Housing Survey, average monthly rents range from $387 for a standard double occupancy room to $1,857 for a luxury two-bedroom unit with two bathrooms and full kitchen facilities.

Average Estimated Monthly Room Occupancy Rates by Bedroom Type – 2021

Three primary factors usually drive the institutional demand for on-campus housing:

1) Cost savings compared to traditional rentals

2) Community building / socializing aspect of residency with peers

3) Curriculum alignment between academics and student life.

While most institutions prefer leasing their room inventory to third parties who operate the facilities with little to no involvement by the institution, there is a significant move away from this practice for both public and private schools. For example, according to Nelson Partners’ latest annual survey of 4-year colleges and universities, only 53% of respondents leased their on-campus housing to third parties in 2015, down from 90% five years ago (2010).

As has been the case for decades, most universities and colleges prefer to lease their on-campus housing units rather than manage them in-house. However, this is increasingly becoming an unviable option as institutions find themselves with ever-increasing financial pressures. Moreover, many colleges and universities are also shifting away from owning and operating traditional residence halls with their double occupancy bedrooms and instead focusing on providing more affordable student housing alternatives such as single occupancy rooms, suites, or apartments.

In a slight reversal from 2010-14, there was a month increase in institutions that expect to privatize 100% of their room inventory in 2015 over 2014 levels. However, this is still down significantly from 2010, when 63% of respondents planned to privatize their room inventory.

 

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Hey There! I’m Gabriel.
You can usually find me reading the newspaper or checking out a good read at the bookstore. I love being informed with recent news in the media but also have a passion for history and past events. Read More…

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You can usually find me reading the newspaper or checking out a good read at the bookstore. I love being informed with recent news in the media but also have a passion for history and past events. Read More…

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