New privately owned student housing properties are delivered every year, with students expecting the next best and newest place to live. On the other hand, developers target — and expect — their newest asset to lease at a fast pace.
But, what are some of the main characteristics of new properties that achieve a full leasing velocity their first year on the market?
It is well known that students prefer close proximity to campus. For this reason, distance from campus has become more of a priority to developers. For instance, in 2012, when higher levels of deliveries began, the average distance for new supply was 0.5 miles from campus. Currently, the national average distance to campus for projects delivering for fall 2017 is 0.3 miles, according to Axiometrics student housing research.
Students (and parents) look at cost when comparing properties. Typically, rents for brand new assets are slightly higher than existing assets. National average effective rent for projects delivering in fall 2017 was $749 in May, more than $100 above overall national average student housing effective rent. The average leasing velocity for assets coming online this fall, and those that disclosed prelease in May, was 60%, which is below the national average of 76.3%, according to off-campus housing data.
Several characteristics can influence a new property’s ability to lease. Some projects may attract students because of location or amenity offerings, while others, with the same qualities, may not receive the same level of traction.
U Centre on Turner
U Centre on Turner, scheduled to deliver this fall, is located on university land through a public-private partnership between American Campus Communities and the University of Missouri. At an average effective rent during the leasing season of $768, above the $550 market average, the property achieved full prelease in May. On-campus average rent per month for a traditional style room was roughly $679, also below the average effective rent for U Centre in May.
But, in addition to location and rent levels, the finest amenities that the U Centre is equipped with, and that are highly attractive to University of Missouri students, include private baths, covered patios, pool with hot tub and sun deck, a multimedia area, state-of-the art fitness center and study rooms.
The Cottages of Fort Collins
Located northeast of Colorado State University, The Cottages of Fort Collins (phase I), owned and managed by Capstone Collegiate Communities, has experienced strong traction from the start. The property was already more than half leased when prelease began in October. The Cottages reached full prelease in April and became one of the few new properties reaching full capacity at this point during the leasing season.
This project is located 1.4 miles from campus, well above the average distance for purpose-built properties for the market (0.5 miles). This distance is typical for cottage-style projects.
But the property has other traits that seem highly attractive. For starts, as its name implies, the asset consists of luxurious cottages and townhomes that, according to the property website, have a neighborhood feeling. The neighborhood-like property includes resort-style amenities such as a pool with spas, sand volleyball court, 24-hour clubhouse, sauna, steam room, hammock lounge, outdoor gathering places, entertainment den, table-tennis and pool tables, a fully equipped fitness center open 24/7 and a pet washing station.
Other convenient amenities are private bathrooms, sidewalk-lined streets and a shuttle to and from campus. The shuttle provides an option to cars for students, since the property is located farther from campus. The second phase of this project is in the planning stages and it will be interesting to see if its performance will be comparable.
The Boulevard is not the only property delivering this fall at Auburn University, but it was the first new property at Auburn to reach full prelease. The asset has been fully leased since December, only one month after preleasing started. This leasing velocity is no surprise to its owner, Swope Properties, as its first phase, which delivered last fall, also is 100% preleased for fall 2017. The property maintained full occupancy throughout this past academic year.
The Boulevard filled up early during the leasing season, generally speaking, and, as of May, reached an average effective rent of $680 throughout the leasing season, $130 above the market average. The property falls 0.6 miles from campus, farther away than the market average for fall 2017 deliveries. Though the property is within walking distance from campus, when grouping the properties from closest to furthest, it falls in the bottom half.
The property is closer to campus than the market average for all off-campus housing (0.8 miles). Situated northeast from campus, the project’s proximity to Auburn University, dining places, shops, and nightlife may be some of the qualities that helped its leasing velocity.
The cottages and manor style houses certainly helped with traction. Other luxurious features that attracted students to sign a lease at The Boulevard include their large bedrooms with private bathrooms and walk-in closets, and private front porches and balconies.
The fall 2017 deliveries that have reached a full prelease have convenient and luxurious amenities in common. That is one reason for their strong first-year performance. In order to compete and keep up with existing assets, the most luxurious amenities continue to be part of the latest delivered properties.