The Southern California Development Forum (SCDF), an organization that provides networking opportunities for those in the real estate community, hosted a panel discussion in late November 2020 about the future of student housing in the Southern California market.
Jason Taylor, vice president of American Campus Communities, one of the nation's largest developers of high-quality student housing apartment communities, served as moderator for panelists from The Scion Group, Brailsford & Dunlavey, UCLA and USC. Taylor began the conversation by asking what changes they see in student housing.
Student Housing Is Still Thriving
In most university markets, occupancy levels outperformed expectations for the fall of 2020. Students in their freshman year view on-campus living as a rite of passage.
Colleges and universities are faced with financial challenges. Current short- and long-term financial strategies must be redirected to address potential cash flow shortages, financial solvency and future viability.
The drop in enrollment at community colleges ranges from 10 to 30 percent, said Kim Wright, a senior associate with the program management firm of Brailsford & Dunlavey. She noted that many low income and first-generation students choose not to enroll this year and that international student enrollment had also seen a significant decline. But Pearlman anticipates higher student enrollment at the community college level in the near future because of the unavailability of beds at four-year state institutions which have seen double-digit increases in applications. He said that community colleges are adding housing during the pandemic to compete with other community colleges.
USC welcomed about 720 spring admit first-year students, who started their college careers in January 2021, while UCLA saw record enrollment for its current freshman.
“We could have been close to 100 percent occupancy based on demand. Our students wanted to be here,” said Brian MacDonald, director of residential education for UCLA. He doesn’t expect a change in occupancy for the winter quarter and he is optimistic about the spring.
New Student Housing on Demand
UCLA and USC have put their RFPs for student housing projects for 2021 on hold but Wright predicts that there will be an uptick in the freshman and sophomore classes for 2021 and 2022, and suggests that colleges should plan to move forward with the RFPs so they will have enough housing for the next couple of years.
She added that students prefer to live in studios or one-bedroom units where they can live by themselves. Cost, location, and WiFi are key elements for students when considering housing.
The Evolving College Campus
Since the 2008 recession, nearly all universities in the U.S. have been forced to evolve their funding sources to be competitive. They have adapted to reduced public funding, maximized other revenue streams or simply created new revenue opportunities. Many schools are cash poor, real estate rich and are looking to monetize their land to help diversify their sources for income. This approach is being used for student housing but not for active multi-family housing projects or retirement villages. Other mixed-use projects can alleviate financial pressures on a campus, while surrounding the campus with productive uses of space.
“Arizona State University Mirabella is moving forward with multiple construction projects around the Tempe area including a research facility, public transportation and a retirement center. The project can generate a lot of revenue to help with other campus projects and priorities. It will diversify the revenue stream that is outside of student housing to support student housing and other campus life aspects,” said Wright.
In summary, there will continue to be a need for student housing. Four-year state institutions and community colleges should continue to build new housing.
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