Attracting millennial students to your property requires offering great amenities, especially those related to comfort and connectivity. Suntan booths, pools, media rooms, spas, flexible lease options, upscale furniture, Wi-Fi and cable are among the amenities used to draw college students into off-campus housing. The days of sterile, concrete, multi-roommate housing are fading as investors increasingly position student housing as a lucrative investment opportunity.
Stoked by worldwide political and economic uncertainty, investors seeking safer investments have taken notice of student housing’s potential. Over 20 million students attend U.S. colleges, a 25 percent increase since 2000, according to the National Center for Education Statistics. Housing them is big business, and the growth in the sector is attractive to investors.
In addition, universities are facing “an aging existing supply, more controlled supply growth and limited pedestrian-to-campus land opportunities,” according to The National Multifamily Housing Council (NMHC). In response, more than 350,000 off-campus beds have been added since 2010, according to Axiometrics. Bloomberg reported that “investors spent $9.6 billion last year acquiring student housing properties, triple what they spent in 2014.”
Balancing Amenities and Returns
As the sector matures, discerning millennial students and their parents have come to expect certain amenities. Balancing those expectations while keeping housing affordable will increasingly challenge building owners. During this past year’s NMHC student housing conference, leaders noted that they are hyper-focused on cutting costs including utilities, making energy efficiency upgrades to these facilities increasingly important in realizing targeted returns.
Green Generation Solutions (GreenGen) has assessed numerous student housing complexes to evaluate the potential for energy efficiency upgrades. Our assessments revealed a variety of opportunities for cost savings and value creation, most notably around lighting efficiencies.
Lighting the Way
At a relatively new eight-story student housing complex in Charleston, South Carolina, new management has concerns about lighting efficiencies.
Typically, buildings that are less than five years old utilize occupancy controls in low-occupancy areas, such as back-of-house areas, photocell and dimming controls in areas with exposure to natural daylighting, and more-efficient lighting technologies such as CFLs and T5 lamps throughout. GreenGen’s assessment presented significant opportunities to upgrade the lighting systems and controls. The extent of incandescent and T8 lamps, in conjunction with very limited controls, lent the opportunity for substantial energy savings.
GreenGen recommended a combination of fixture and lamp replacements, as well as occupancy-based controls. LEDs offer much greater efficacy than their incandescent, fluorescent, and metal halide equivalents. Further, the life of an LED is between three and 10 times longer than the lamp and/or fixture it replaces, reducing ongoing maintenance costs. We also determined that there was a strong opportunity to reduce energy costs through the use of automated occupancy sensors in intermittently occupied spaces such as offices, utility closets, and break rooms. This allowed energy use to better correlate with actual physical occupancy.
Snacks and Drinks
Generally, vending machines in student housing operate 24/7. However, they are not continuously used by residents and can generate significant energy savings when cycled down during periods of non-use. Occupancy-based vending machine controls turn off machine lights and cycle down compressors in the cold vending machines to optimize savings while maintaining desired temperatures. When sensors detect nearby activity, the machine lights turn on and compressors cycle higher to return to their active setting. Typical savings for these types of controls are in excess of 50 percent.
Reducing water consumption presents yet another savings opportunity. Faucets in the apartment and common area restrooms currently consume 1.5 gallons per minute (GPM). Aerators that bring consumption down as far as 0.5 GPM are available. Retrofitting existing faucets with pressure controllers reduces water consumption and heating costs by maintaining a consistent GPM flow throughout a wide range of pressures.
Building Up Savings
Implementing these measures will significantly improve the property’s efficiency and decrease its energy consumption and costs. The upgrades along with available rebates increase the building’s value by more than $1,110 per bed or a total of $464,000.
Every property presents savings opportunities, but each building requires a custom solution. Lighting efficiencies and plug load reductions are generally at the top of the list because they are often the least expensive, provide the quickest net payback, and add value to a building, as well as increase the comfort and safety of residents, improving the resident experience.
Longer term solutions often involve HVAC replacement or controls, or for larger facilities, we typically recommend on-site power generation systems that enable a site to offset utility-grid consumption, thereby reducing the amount of purchased power and lowering energy costs. A common approach to on-site power is using photovoltaic (PV) systems, which use solar cells to convert energy, lowering costs and reducing carbon emissions.
College students appreciate amenities, but they also care about the environment. Student housing property owners strive to satisfy their tenants’ needs while demonstrating an energy consciousness and minimizing their environmental impact. Both students and property owners benefit when a building can operate in the green.
— Brad Dockser, CEO, Green Generation Solutions