The Student Housing Amenity Race Is Over. Affordability Is The New King
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When it comes to student housing, developers are going back to the basics to meet the demands of a new generation of students: Generation Z.
The days of college students wanting to stay at luxurious student housing properties with a lazy river, climbing gyms, virtual reality studios and other over-the-top amenities are over, experts said last week at Bisnow’s SoCal Student Housing and Higher Education Summit in Los Angeles.
“The amenity war is over and nobody won,” Michaels Student Living Senior Vice President Ned Williams said. “You’re not seeing that anymore.”
The high cost of construction and labor, especially in California, are driving more developers to focus on building out the basic necessities for students such as a room with a kitchen and larger common areas.
And given the high cost of college and rising debt, the new generation of students also prefer affordable digs where they can focus on studying rather than posh living.
More than 150 people attended Bisnow’s annual student housing event, held at the LA Grand Hotel Downtown in downtown Los Angeles.
At the event, panelists discussed the state of the student housing industry, why student housing projects next to Power 5 football schools often tend to do better than others, and the great need to build not just for undergraduates but for the school’s faculty and graduate students.
Williams said several university officials have spoken to his company about building projects for graduate students and faculty. In big cities with high rent, faculty often have to commute an hour to an hour and a half to teach classes, he said.
“What university officials have told us is that the undergraduate demands [for student housing] have been satisfied,” Williams said. “Now, there is a need for graduate and faculty housing … We’re seeing a ton of demand and that’s a huge trend.”
Williams said the graduate program is where the universities often make "a lot of money and [are] experiencing growth."
However, building housing for grad students and faculty is not that easy.
“It’s basically multifamily,” Williams said.
It is not easy to get construction costs to pencil with grad students and faculty. Pierce Education Properties President and CEO Fred Pierce said building housing for graduate students "is a narrow market."
"I hate to say this but graduate students are poor," Pierce said. "Their parents are not paying for their education."
Though there are plenty of undergraduate student housing options, both on-campus and off-campus, the new generation of students wants affordable, smaller places with lots of multipurpose rooms, Novak said.
“The trend has gone away from providing amenities such as the tennis courts and the lazy river and now going back to more practical type of amenities,” Novak said.
NB Private Capital CEO Blake Wettengel said his company has conducted a survey for students every year and he has noticed the differences between and Gen Z and millennials.
High-speed internet is the most important amenity, Blake said, along with study rooms and multipurpose rooms that serve different functions. He has also noticed that compared to millennials, Gen Z is a more studious population.
"We're seeing a shift in the mindset with what they are trying to accomplish," Blake said.
When it comes to living arrangements, Blake said Gen Zers often want their own room for privacy, a place to study, and conference centers where they can study in a group.
"Where you used to see fun things like golf simulators, gourmet kitchens and such, Gen Z is much more economical," Blake said. "You have to remember, Gen Z comes from a family with one or two kids, they are not used to sharing a room with anyone else. They are not looking for anything grandiose."
"These are the things you have to look for now when you're developing [student housing]," Blake said.