College Students Are Taking Developers Back To School On How To Design Apartments

The pandemic years were tough ones for universities and developers of student housing as closures and restrictions kept many learning remotely, taking gap years or just waiting it out at home. Over the past several years, though, the worm has turned: Student housing rents are on a robust upswing that hit an average 9% nationally this past fall.

That’s great news for developers able to meet new student demand for flexible design, high-end perks and sustainability.

And according to panelists at Bisnow’s Philadelphia Student Housing and Higher Ed Development, getting it right today can pay dividends tomorrow.

“The real advantage of student housing is, if you build any other kind of housing, you know what to expect from the students when they graduate,” Joe Coyle, president of student housing for The Michaels Organization, said at last week’s event, held at the Sheraton Philadelphia Downtown.

“They're going to be looking for very similar things after they graduate. One of the great benefits, I think, is knowing what to expect from younger folks when [you’re] getting ready to lease to them in the real world.”

To lure students to the maturing rental markets around Drexel University and the University of Pennsylvania, Campus Apartments Executive Vice President of Housing Warren Burke said it is focusing on amenities that emphasize safety and community, including transforming common areas like lobbies into hubs of activity and interaction rather than just waypoints in and out of buildings. 

Campus Apartments is also adding high-end touches like laundry and package handling while ensuring it stays on top of emerging technology.

“It's just a baseline condition, but yet, the specifications tend to continually evolve and [become] more involved with programs and activities and interactions,” Burke said. “We spend a lot of time on our phones. We expect to have that connectivity instantly and continuously.”

Offering a suite of amenities goes double for graduate students, who tend to have less disposable income and are increasingly seeking small but efficient micro-units, especially in major cities.

Those units come with a need for extra perks and gathering spaces, Coyle said, pointing to a 180-micro-unit project completed in Boston that includes two decks for gatherings, an Italian coffee shop “and, yes, a lot more amenity spaces, places for people to meet, because they're by themselves in the room with their phones.”

Panelists emphasized the growing importance of sustainability on tenant wishlists, including solar power, water reuse and smart building technologies that also reduce utility costs and environmental impact.

Smart technologies afford building operators the flexibility and savings of shutting down cooling and heat over breaks when students are away. But more importantly, younger residents are insisting on these features.

Coyle said The Michaels Organization is looking at all 680 of its properties to evaluate how it can incorporate solar power and other cost- and Earth-saving measures.

“Sustainability is one of the No. 1 goals across our industry as a place to start, but you're also seeing it at market levels,” he said. “I mean, once they graduate from school, they're looking for the same things when they get into the market.”

At Drexel University, student-driven sustainability efforts once focused on the school’s dining program and eliminating waste there. Over the last few years, though, the school’s housing portfolio has gotten more scrutiny, according to Don Liberati, Drexel’s associate vice president of business services.

Liberati said Drexel is razing a residence hall and turning it into green space, generating student interest in what will be planted and how it will be maintained.

“This continues to become more and more important for students — not only how we conduct our business but who we do business with,” Liberati said. “We get a lot more questions about that in the last two to three years, as opposed to the whole seven years before that.”

Drexel is also adding common areas, study spaces and even academic facilities in residential buildings to create a more holistic living and learning environment for students, he said.

Student demand across Philadelphia has been relatively steady. Drexel is seeing stable enrollment, while the University of Pennsylvania is seeing slight growth in student numbers, panelists said. Temple University lost around 13,000 students this year, although Coyle said its numbers will likely rebound thanks to a strong incoming freshman class.

But nationally, demand — and rent growth — is through the roof since the pandemic, particularly at large, state-run Power Five institutions. 

“I've never in 30 years seen the growth in rents that we've seen in the last two or three [years], especially the last two, anywhere from high single digits to medium double-digit increases in rent over a couple-year period of time,” Coyle said.

Numbers like that ensure student housing developers will continue paying attention to trends in what students prioritize. And apartment builders of all stripes should take note, Burke said.

“There are some options out there starting to develop in terms of taking the student housing model for young professionals, the shared living concepts that have great amenity packages, typically in higher-cost markets where it's a little challenging to live independently,” he said. “So, I'm excited to see that continue to play out, to see if that will have much success.”