NMHC Student Housing Conference
October 23, 2017
Valbridge Property Advisors attended the NMHC Student Housing Conference in Tampa, Florida in September. This event brings together leaders from all parts of the sector including owners, developers, investors, lenders, brokers, university partners, and more, to discuss the beginning of another school year and share the most up-to-date industry information including lease-up numbers, new developments, millennial marketing strategies, technological innovations, new entrants, and other valuable information designed to help improve negotiating skills and bottom line results. The conference creates an opportunity for networking and one-on-one between industry professionals.
The keynote speaker for the conference was Coach Ken Carter, Author and Founder & Chairman of the Coach Ken Carter Foundation. He spoke on the aspects of leadership, hard work, and bringing value to the workplace. Some of Carter’s prolific quotes from the conference include, “You don't get paid by the hour, but by the value you bring to the hour”, “Working hard is a skill” and “Lead from the front to inspire”.
Among the global economic uncertainty, investors are pursuing business in the U.S. student housing market due to continued enrollment growth at universities and colleges and the sector’s consistent performance on delivering attractive, risk-adjusted returns. American Campus Communities CEO Bill Bayless spoke on the topic, stating, “Investors are seeing the consistent performance of student housing from a revenue and NOI perspective.” It was noted that the capital today is different than it was just five years ago.
Many student housing executives claim that the bulk of their partners are people they were not working with just two years ago, and that foreign institutional investors are playing a prominent role in the market, making up 51 percent of the capital in the market. They are planning to make up an even larger percent by doubling or even tripling their investments in the future. J. Wesley Rogers, president and CEO of Landmark said, “The deals are getting bigger, the companies are getting bigger, and the checks are getting bigger.” Executives say they are consistently seeing more development deals in the $75 million to $100 million range.
For the first time at the NMHC Student Housing Conference, there was a focus group of 16 undergraduate and graduate students, including domestic and international. The students shared their thoughts and opinions on their personal preferences when searching for a place to rent for the school year. Proximity to campus was a top priority for the students, preferring a short commute as well as an emphasis on the level of safety that comes with living near campus. Other factors included a strong online presence by the community that makes it easier for students to narrow their search with photos and online reviews, and amenities like club houses, fitness centers, study areas, and virtually fail-proof internet connectivity.
Construction timelines were a topic of interest at the conference, due to the costly consequence for student housing firms if the project isn’t complete by the start of a new academic year. Student housing projects are getting much more complicated thanks to factors like higher-density developments, weather, and labor. These all adds risk to the project timeline. Brain Dinerstein, president of The Dinerstein Companies, spoke on the issue, saying, “The challenge is construction. Costs are a mess. There are a hundred reasons why. Start with weather. Labor. Add in immigration. The fact that we don’t have as many mature, experienced people on staff. The equity needs to be aware of that. Everything takes longer.” Many student housing executives are building more cushion in to their construction schedules and moving completion dates back while also trying to work with the calendar to take advantage of school breaks and tweaking occupancy strategies to minimize risk, such as moving residents in while their units are being upgraded.
During a session focused on driving net operating income (NOI), student housing managers shared their strategies. For cost improvements and controls, they are renegotiating contracts for better pricing, looking carefully at utility cost, and some are even moving away form all-inclusive utility as a better way to control operating costs. Julie Bonnin, COO of Asset Campus Housing, commented on the advantage of hiring a third-party vendor for the task of managing utility billing, saying that an outside utility management firm has offered piece of mind. “Different states have different requirements, so if you get in trouble, it’s a nightmare. There have been massive lawsuits in a number of states. And it’s just not worth it.” Contrary to this, some firms still handle the utility billing on their own due to cutting expenses and having the extra cost for covering the service go to them directly.
Other important topics that were discussed include rebranding and how it drives performance improvements, cybersecurity concerns and how to stay ahead of the curve. Another conference highlight included a session on the transaction market featuring shark tank-style presentations, where student housing deals were fast pitched to a panel of investors in hopes of nailing down an important piece of their capital stacks.
Valbridge Property Advisors appreciated the opportunity to attend the NMHC Student Housing Conference. Events like these are one of the many ways Valbridge works to stay well-informed of various industry trends and perceptions.