Even though Canada had more than 800,000 full-time students attending 82 universities, with half of those needing accommodations, student housing was a largely informal market, where conversions of single-family homes were the norm.
What a difference five years makes. Today, nearly 20,000 privately operated purpose-built off-campus student housing beds exist within the Canadian marketplace. However, they remain grouped in a limited number of cities.
Half of all off-campus beds are found in Waterloo, Ont. Another 2,000 beds are in London, Ont. The rest are grouped among major centres like Toronto, Montreal and Halifax, leaving the rest of the country virtually unserved.
No off-campus student housing developments in Vancouver
While it is natural to gravitate towards the larger markets, this approach comes with additional challenges. Large markets tend to be hot markets, not just for student housing. Despite housing six post-secondary institutions, including the nationally prestigious University of British Columbia and Simon Fraser University, Vancouver has virtually no off-campus student housing developments.
Looking at the area, it’s easy to see why, as UBC is surrounded by extensive grounds that are kept in its natural state, and the city as a whole has been rated the second-most unaffordable housing in the world, after Hong Kong.
But Vancouver is just one city out of dozens that have one or more post-secondary institutions. Cities like Victoria, Edmonton, Saskatoon, St. John’s and Fredericton all have significant universities with large populations of non-local students, and no privately built student housing to speak of.
Private student housing developments succeed when they cater to the needs of students, offering amenities like free wireless internet, study rooms and private bedrooms with doors that lock, but one amenity stands above all, and that is location. Any development that is at the front door of the institution has a substantial advantage over any other development that is located further away.
The key to getting that prime spot of land is to be the first into the marketplace.
Even Thunder Bay, Ont., which has a population of 109,000, could be a gold mine for a developer that strikes first. Lakehead University has a full-time population of 7,100 students, of which roughly 3,500 came from outside northwestern Ontario (according to statistics from Lakehead University itself), meaning the other 3,600 students are in need of housing.
Only 1,142 beds available on Lakehead campus
Lakehead has only 1,142 beds available on campus, so where do the remaining 2,458 students go to find housing? With no purpose-built student housing in the city, they’re thrown onto the conventional rental marketplace, with landlords who have little understanding of the needs of students, and properties that offer few of the amenities students want.
While a market of just 2,458 students may seem small compared to Toronto or Waterloo, with their student base in the 10s of thousands, the fact Thunder Bay is completely unserved means any developer that finds a good site can easily fill up a development offering 300 beds, and make a tidy profit while doing so.
And Thunder Bay is just one example of dozens across this country.
The key is knowing where to strike, and striking first.
The Canadian Apartment Symposium Series
To learn more about the student housing marketplace, and good places to strike, developers, financiers and building managers should attend the North American New Apartment Construction Conference with Student Housing, held on Wednesday, April 22, 2015, on the last day of the Canadian Apartment Symposium Series. This event will take place at the Metro Toronto Convention Centre.
This conference is an excellent opportunity for anyone interested in investing in the student housing market to learn more about its potential and its unique aspects. Experts from the field of student housing will be on hand to share their knowledge, and there will be school and city officials, as well as other developers, financiers and building mangers around to talk business.
Derek Lobo is the founder and CEO of SVN Rock Advisors Inc., a real estate brokerage with over 30 years of experience in helping investors make the most out of buying, selling, and renovating purpose-built apartment buildings. Learn more about SVN Rock Advisors Inc., Brokerage on their website at www.SVNRock.ca.