Top University Says Student Housing Needs To Think About Its Long-Term Business Model And Design
The director of property at one of London’s largest universities thinks the student housing sector needs to re-examine its business model and the way it builds accommodation.
Speaking at Bisnow’s London State of the Market digital summit last week, London School of Economics Director of Estates Julian Robinson said universities are seeing fewer students taking residence in the 2020/2021 academic year as a result of the coronavirus pandemic, and a similar pattern in the next academic year would mean a serious rethink on the school’s business model and estate strategy.
Student accommodation providers like Unite have reported occupancy for 2020/21 that is below average, but not dramatically so. But since the academic year began, some students have been leaving their accommodation because of the difficulty of self-isolating in halls of residence.
“It’s too early to take a decision, but in terms of long-term investment plans, universities are going to take this year and see what on earth is happening,” Robinson said on a panel moderated by Addleshaw Goddard Head of Real Estate Adrian Collins. “Just to put this in perspective for us, while our undergraduate halls are 80% full, our postgraduate halls are only 50-60% full. Students, many from overseas, simply haven’t turned up. And a number of those that have are now saying they want to go back home and study online because they don’t feel safe, not at LSE, but generally — there is a perception about UK plc that is not playing well with overseas students right now.”
Robinson pointed out postgraduate students typically occupy the most expensive accommodation, and thus have a big impact on balance sheets.
“Given the market for postgraduate students is generally for the longer, 50-week lets, and in the more expensive halls, I think that is going to cause universities and developers to just think carefully about the long-term implications of that,” he said. “We hope it will just be for a year, but for instance this year we canceled our summer school, so that is 10,000 students not coming to London. If we have a similar situation next summer then there will be a really sharp intake of breath in terms of what is the new business model for the LSE and other top universities.”
He said the impact of the coronavirus should cause student accommodation developers to rethink how they design and build schemes, if they want to avoid their assets potentially becoming obsolete.
“In terms of the design of student housing, I think it needs to be designed so it can easily be converted to conventional residential housing, both public and private sector,” he said. “I think that would be a very sensible idea, so that design of lots of long corridors with rooms off of them will need to be rethought.”