As today’s colleges and universities evolve and expand their offerings in an effort to attract more students, off-campus student housing projects need to evolve. Students today and their families expect amenity laden projects that are safe, secure and fun.
Given these conditions and the competitive environment, it is not surprising that some student housing developers are looking to create mixed-use projects around their student housing. More than putting “heads in beds” or jamming a small amount of retail on the ground floor of a student housing tower as an afterthought, these developers are striving to create places that not only meet the needs of students but also the broader community. The focus is and should be on realizing the full value of the real estate with a thoughtful and market-based integration of multiple uses.
A successful mixed-use project requires student housing developers to make the effort to fully understand their market. Not only the student population. In many ways, this requires developers to focus on the fundamental concepts of demand and supply. This focus will not only increase the likelihood of a successful project but will be absolutely necessary in order to tell the story of the mixed-use project to potential retail, food and beverage, hospitality and other tenants and operators.
The demand side of the equation consists of four components — trade area residents, students, daytime workers and visitors to the university (such as for athletic and cultural events). The developer needs to fully understand the composition of each of these components. For residents, for instance, what are population and employment trends, income levels, percentage of renter households versus owner occupied, number of people per household, median age, etc. Based on this demand knowledge, market-based projections can made. Total spending across all retail and dining categories can be estimated. The need for market rate multi-family units and for sale residential product can be estimated. This is the information that is needed to begin to determine what is the right “mix” that is supportable by the market.
The other side of the mixed-use development equation is supply. The developer and its team will need to understand retail sales, vacancy and multi-family absorption rates, rents, etc. in the market.
The final step is to combine the demand and supply analysis. In the retail space, this step enables the identification of voids in the market or – better said – opportunities for the project. A void calls out potential opportunity and allows the developer to tailor the design and size of its project for the market. Anticipated shortages in residential units can also be highlighted. Hotel demand and corresponding revenue can be estimated. The building blocks for a successful mixed-use project are coming together based on specialized and focused market research.
Student housing developers know students and what drives students and their parents to make housing decisions. To create a genuine mixed-use place in a university setting, however, developers must fully understand the broader market. Without this understanding and knowledge, a mixed-use project can become a mixed-up project.
— Dan Sheridan, partner, Hoffman Strategy Group. Hoffman Strategy Group is a real estate advisory firm focused on providing clients with the foundational information – local market analytics, consumer data and feasibility analysis, etc. – necessary for the development of successful mixed use projects. This work includes advising student housing developers on how to maximize the value of their real estate by integrating multiple and different uses into their projects.