For the past decade, across the United States developers have been building a boom in purpose-built student housing. These mid-rise and high-rise units challenge the old stereotypes of student housing; the buildings are high-quality, and feature amenities that cater to student needs.
These developments alter the student housing market wherever they appear. They provide housing that’s comparable to or better than on-campus student housing, and they are a challenge to poorer-quality privately built off-campus student housing.
Several months back, the Wall Street Journal profiled the rising student housing market, noting that upmarket student housing developments have forced poor-quality developments to close. One such example was “Ashby Crossing” near James Madison University in Harrisonburg, Va. The article stated that real estate analysts were worried that the closing of Ashby Crossing was a sign smaller operators were being pushed out.
However the article itself noted that students at James Madison University were not impressed by the quality of the housing offered by Ashby Crossing, nicknaming it “Trashby”. Students today have more disposable income than ever before, and they are backed by parents and grandparents who want their children to have a good educational experience, including student residences which are safe, comfortable, and which cater to student needs.
In terms of realizing the opportunities that exist, the Canadian student housing market is about 10 years behind the American student housing market. Today, there are only 19,000 privately built student housing beds available in Canada – a drop in the bucket when you consider more than 400,000 students across Canada are looking for accommodations.
However, the City of Waterloo has led Canada in building student housing. Nearly half of all privately built student housing across Canada has been built in this southwestern Ontario city. Most of it has been in high-quality mid-rises and high rises. If there is a place in Canada where we are seeing situations similar to Harrisonburg, it is Waterloo.
Waterloo student housing result of collaboration
The situation in Waterloo did not occur by accident. Various interests, including the city government, local police and fire departments, the University of Waterloo and Wilfrid Laurier University as well as private developers helped come up with a student housing plan that would concentrate new high-density, high-quality student housing developments along major arterial roads around the city’s two major universities.
Prior to this decision, most of the student housing in Waterloo was converted single-family homes in the neighbourhoods surrounding the universities. Many of these buildings were not good quality, and tensions between student tenants and local residents ran high. Proposals to build purpose-built student housing developments in Waterloo met some resistance, at first.
Planners and developers overcame the concerns of residents by pointing out the new student housing developments would replace converted single-family homes that were being operated by small-scale landlords without proper oversight. Large, high-quality buildings offer students more services, including better security. For fire departments, it was easier for fire inspectors to visit a 400-unit student high-rise than it was to monitor 100 widely spaced four-bedroom homes.
Waterloo’s efforts have permanently altered the face of the student housing market in the city. The student “ghetto” has shifted, and while it is even more prominent, it has dramatically improved. The quality of the housing has vastly improved, and the major roads surrounding the city’s two universities are vibrant mixed-use communities with shops and restaurants catering to student needs.
Old student housing become family homes
As for the residential neighbourhoods where the older student housing used to reside, studies indicate that families have started to move back into the converted homes. Upkeep has improved, and an older community has reasserted itself. Tensions between students and local residents have eased.
The construction of high-quality student housing in Canada and the United States does challenge the providers of the older student housing that existed in the marketplace until the new arrivals. This is a natural economic phenomenon, a sign of the growing affluence of students, and a demand for better-quality accommodations.
As Harrisonburg shows, the new high-quality student housing is pushing out substandard accommodations that aren’t well-liked by students. In the case of Waterloo, this changeover is even improving the quality of regular housing in the local neighbourhood where student housing used to be provided.
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.