Acute Housing Affordability Crisis Extends To California's College Students

The commercial real estate industry and public sector have barely scratched the surface in their effort to provide adequate affordable student housing for California students. That was the consensus at Bisnow’s Northern California Student Housing and University Development Summit in downtown San Francisco last week.

Housing availability at four-year institutions in the region surpasses the availability at smaller community colleges, where the need for safer and more affordable housing is acute. This shortage is happening amid an affordable housing shortage and a statewide budget shortfall that is likely to impact publicly funded programs of all kinds.

“It’s important for universities to understand that we have a housing crisis,” San Francisco State University Executive Director of Real Estate Development Hamid Ghaemmaghami said at the event, held at the JW Marriott San Francisco Union Square. “The state has opened up their coffers with an initial tranche of funding, but who knows if the California state budget will be cut? Public-private partnerships aren’t always the solution.” 

At the state’s 12 community colleges, the number of on-campus beds in the fall of 2022 was enough for less than 0.5% of the system’s total headcount, according to the California Legislative Analyst’s Office.  

California State University’s 23 campuses also have a critical housing shortage. There were enough on-campus beds for 13% of all fall 2022 students systemwide, with 4% housed at the Fresno campus, state data showed. 

But the solutions are far from simple. Summit participants said that an often complex combination of public and private financing, faster environmental approvals by state and local entities, inexpensive construction tech and increased community collaboration would enable the delivery of more affordable student housing throughout the region and the state.

“Investing in student housing and education is the best place to put public money today,” said Kelly Snider, a San Jose State University professor in the Department of Urban & Regional Planning and director of the Certificate in Real Estate Development Program. “Community colleges are the most long-term dependable partner you’re going to find.”

Snider said coalition-building is necessary to get projects across the finish line. Local voters and businesses play an important role as part of this coalition. They can support public funding for improved transit options or vote to increase the state’s minimum wage to help student workers who face housing-security issues.

“The developer, property owner or university needs to pay attention to their coalition-building,” she said. “You have to keep everybody rowing in the same direction.”

With new affordable student housing construction averaging $1M per door, “Suddenly, affordable housing is becoming more expensive to develop than market-rate housing,” said Jared Everett, managing director of university partnerships for Greystar.

Everett said one of the many struggles developers face is finding a way to deliver units affordable to community college students who commute long distances daily or to those who have difficulty affording a place to live.

There is enough market-rate rental housing in Northern California, but not enough subsidized and affordable housing for the general population, “and the same holds true for students,” Ghaemmaghami said.

“We need to focus our solutions on the lower-cost end. If we focus our efforts on the lowest-cost housing, then we will solve the problem for all students,” he said, adding this can be accomplished with a combination of state grants and public and private financing.

The bottom line is that the lack of affordable housing makes it difficult for students to study and obtain their degrees, McCarthy Building Cos. Senior Director of Design Integration Rob Benson said. 

Prefab or modular construction could bring down construction costs, Benson said, adding that projects could come online faster. Another panelist said new construction tech such as modular design can expedite the development process and save the development team money.

“Building technologies need to be used to build these quicker,” Lowney Architecture Design Director Mark Donahue said. 

Donahue cited the implementation of new building technologies on a project for Compton College, an independent community college near Los Angeles.

“If you can deliver the beds six months earlier, that is well worth your while,” he said, adding that in Southern California, stick-built construction totals about $650 per SF, while modular construction is south of $500 per SF.

Besides development costs, the design of these housing projects must reflect the needs of students who attend community colleges across California.

“We aren’t designing projects for 19-year-olds smoking a joint on the quad,” HPI Architecture Design Director Jeff Bacurin said. “Instead, many community college students may have families and one or two jobs, so you must also design the project for their families.”

Everett said most of the student housing stock in Northern California is between 30 and 40 years old, which doesn’t suit the needs of today’s diverse population of students in four-year state institutions, private colleges and two-year community colleges. 

“P3 will continue to be a way to get these projects done, but they will have to be creative,” Everett said. “Policy changes must be made to allow affordable housing and student housing to be developed.”

Panelists said that ideally, community affordable housing projects would be developed statewide. For instance, student housing would be developed on the same parcel as teacher and staff housing, graduate student housing and first-responder housing. These types of assets would qualify for tax exemptions from the federal government. 

Snider cited the redevelopment of a historic San Jose hotel as a prime example of a successful public-private partnership that will not only provide housing but also spur economic development downtown. SJSU is transforming the 700-key Signia by Hilton into student housing with 700 bedrooms, 124 of which will be affordable. The university tapped Mill Valley-based Throckmorton Partners, a value-add multifamily investment platform, to reposition the asset. 

The college called the project “the Bay Area's largest post-pandemic conversion of a downtown commercial property to residential housing,” according to ABC7.

The university plans to leverage new housing-specific state funding secured in 2023 to eventually build 517 affordable student beds across its entire housing stock, according to SJSU NewsCenter, the college newspaper.

SJSU was granted access to $89M in debt relief as part of the California Higher Education Student Housing Program, allowing the university to lease the property with an option to own after two years.