Standardizing the Student Market

Dallas How important is standard market data, and how is the market defined?

Dallas —  Axiometrics Inc., a provider of market data and advisory services, announced last week it is debuting a national student housing research report. The company cited a high demand among its clients for data on the student housing market as well as a lack of standardized reporting on the industry as the inspiration to provide this product and service.

The research is geared to serve the student housing REITS, the companies that invest in the REITS, other capital sources, management companies and the universities themselves, which could use the tool to make development decisions and that are benchmarked against their peer universities, according to the company.

Research is crucial to most companies, and while there may be a lack of market data that evaluates student housing, Mark Schundler, associate vice president of investments at Campus Apartments says most of the big players have the resources to track data and trends themselves.

“It’s true that there are very few market research firms that track ‘college town’ markets beyond sales comps,” Schundler says. “However, I wouldn’t go so far as to say that the industry lacks standardized research. The large industry players that understand the space are very efficient at gathering market information in-house, and we’re generally all focusing on the same data points, metrics, and in some cases, we’re utilizing the same sources, for example, university-provided common data sets that track student enrollment trends, tuition rates, and student demographics.”

According to Axiometrics COO Keith Walters, his company is the first to offer research of this caliber on a national level. Each month, subscribers can log into to the Axiometrics portal and receive monthly updated information about purpose built student housing; university-run, on-campus housing; and what Walters calls the “student competitive” market.

“These are the conventional properties that are not leasing by the bed,” Walters says. “We already had a lot of those properties in our database. We measure whether they’re marketing to the student and how close they are to campus, for example. For those properties, we have an algorithm that allows us to convert and look at them at the bed level. We can do an apples-to-apples comparison and look at more of a complete market in a university that includes the dorm beds, the purpose built beds, as well as these beds out in the shadow market.”

Walters says the Axiometric solution also tracks the development pipeline, from a rough concept through planning, construction and initial lease up. Other influencing market factors include tracking the international enrollment factor, particularly as it relates to a five-year forecast that also incorporates a university’s total enrollment, freshman retention rate, graduation rate, tuition, financial aid and operating budget. Housing data sets will show occupancy, capacity and the room and board rate.

Off campus, one of the key pieces of data gathered at purpose-built properties is “pre-lease velocity.”

“That’s the beauty of the student housing world,” says Jay Denton, vice president of research. “On the conventional side, we can survey properties every month, but we’re not sure how many beds turned over from one month to the next. On the student side, we can then apply the weighted average effective rent and get a good measure of what that revenue is going to be for that property next year.”

Schundler agrees that measuring that small window in time is critical to an accurate measure of the student sector.

“For student housing in particular, I would say that the timing of market research is very important – particularly during the compressed lease-up window. From an investment standpoint, you ultimately want to be able to track economic rent by unit type. Anything less than this, and the picture is fuzzy.”

— Lynn Peisner

  This sample image from the Axiometrics Web portal is looking at the University of Texas. Users can hover over icons for different types of properties, and a “snapshot” will pop up.

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