Multi-Institutional Might Be The Answer To Bay Area Student Housing Woes
The Bay Area's public and private student-housing producers have no easy task when it comes to competing with the region's office and market-rate residential developers for land and investment.
But UC Hastings College of Law and a few others may have a decent answer, especially for the Bay Area's myriad small and midsized colleges and universities, UC Hastings Chief Financial Officer David Seward says.
By May, UC Hastings expects to break ground at 198 McCallister St., where a 14-story, 650-unit student housing and academic building will be constructed and shared with UC San Francisco, Seward said, speaking on one of the panels at Bisnow's Bay Area Student Housing Summit.
Part of the school's planned academic village, which will include space for UC Hastings, UC San Francisco and other schools, the McCallister Street project represents a "multi-institutional" tack Seward and other panelists think could allow for more student housing to pencil.
"The challenge is really about how to scale," Seward said. "Trying to achieve financial feasibility with a small school is inherently challenging, and we've addressed that by looking to our academic brethren and partnering with them to provide those students with housing opportunities, as well as to achieve the economies of scale."
Real estate giant Greystar, which will develop Hastings' $450M academic village, owns a handful of multi-institutional buildings in London. But the approach is much less tested in the U.S., according to Greystar Senior Managing Director Julie Skolnicki.
One example is the University Center of Chicago, an 18-story dorm for almost 1,700 students across multiple universities in the city's South Loop area. Similar buildings are few and far between in the U.S.
"In the U.S., there typically haven't been a lot of student-housing developments that cut across multiple universities," Skolnicki said. "San Francisco is truly unique, so we see it as a pacesetter."
The Dinerstein Cos. West Coast Partner Josh Vasbinder, whose company recently broke into Berkeley's student housing market with a $180M portfolio acquisition, said creativity across the board is a must to make student housing projects work in the Bay Area.
"You've got to be creative in finding multiple users to come into a space, or finding a nontraditional building that you're retrofitting," he said.
In some cases, that creativity also extends to using faculty housing development to help fund more affordable student housing units.
That can be easier for schools that tend to have more well-compensated professors, according to Seward, who said Hastings is exploring market-rate or slightly below-market-rate faculty housing to subsidize student housing.
"Student housing is like building affordable housing with no subsidy," he said. "There are no external tax credits. Under state policy, we can't use state appropriations or student educational fees, so we really have a limited menu of options."
UC Berkeley, which has about 40,000 students to UC Hastings' approximately 950, won't subsidize student housing with faculty housing, UC Berkeley Vice Chancellor and Chief Financial Officer Rosemarie Rae said, nor does it have any announced plans for multi-college housing.
Instead, it has entered into about 10 master leases for sites around its campus, which UC Berkeley figures could accommodate 6,000 of the 9,000 student housing units it hopes to build in the next decade, Rae said.
"This is not a case of us deciding which of our 10 sites we're going to build on," she said. "We are building on every site."
Nonetheless, UC Berkeley is incorporating fluidity in its design by making its units fit for both students and faculty, which will help mitigate risk for financial backers, Rae said.
In the end, with tens of thousands of beds still needed in S.F. alone, not to mention the other cities, whatever method allows developers to meet some of the market's demand is worth looking at, Skolnicki said.
"It's a matter of how can you get into the market, but investors are absolutely looking here and partnering with universities to problem-solve what really is a pretty significant demand and affordability crunch," she said.