An urgent need for more student and workforce housing has been a growing topic of discussion in the greater Boston commercial real estate market. There are 35 colleges, universities, and community colleges in the city of Boston alone, and 102 colleges within 50 miles. Although Boston only accounts for 10% of the total population of Massachusetts, it contributes to 34% of the total student enrollment in the state, amounting to 150,000 students. Balancing the population flux of a rising student body with the housing needs of a robust economy and metropolitan will require a concerted commitment to the construction of high-quality, cost-efficient, integrated student housing complexes. I recently moderated a panel at the BisNow 2017 University Housing symposium where the keynote focused on Boston’s housing shortage, including student and workforce housing. The student housing trend remains a key goal in the Boston metro housing market, with a stated target of reaching 18,500 by 2030 in order to balance out the need for residential housing in the workforce market.
The Evolution of Student Housing
The Boston area has continued to see a steady rise in student enrollees, simultaneously increasing the demand in student housing. Partially fueled by the addition of part-time and non-degree students, enrollment at Boston institutions of higher learning rose from 127,000 in 1990 to 152,000 in 2010. Of the current 148,000 students attending Boston schools, only about 36,000 live on campus. There has been a consistent trend towards more residential campuses, even for what were once considered “commuter” schools. According to a Boston city housing report, demand for campus housing rose 6% between 2014 and 2015.
Rents in many of the neighborhoods near clusters of universities can average between mid-$2,000 to mid-$3,000. The ramifications of that include shoddy living conditions for students due to unscrupulous landlords, fierce competition for available housing between families, and university employees who comprise 6.5% of Boston jobs.
The key takeaway from the panel discussed the new approach to constructing student housing in urban environments, by using private developers to free up much-needed capital for other university priorities such as academic building needs. This thriving expansion of dormitories and living spaces will serve a dual purpose: to solve urgent university residential needs and create a hub of student experience and interaction. From Boston’s perspective, it will alleviate overcrowding and increase affordability to attract families and diversity.
Increasingly, residential life is the focus of academic communities, where students interact, study, and form lifelong bonds to each other and their alma mater, increasing long-term engagement such as donations from alumni, creating what one panelist called the much sought “cradle-to-grave student experience.”
Residence halls and dorms are perceived as adding asset value to campuses to attract students with lifestyle centers, amenities, and communal and academic spaces, all of which are an extension of the university’s overall brand. This fuels the shifting lifestyle desires of millennials, which prioritizes sustainability and community.
This retention of students on campus is feeding into both the evolution of and need for the development of the future prototypes of university housing. In addition to traditional concept dorms and residential housing, private development is fueling creative concepts such as fusion facilities (living and event spaces paired with amenities) and ultra-affordable micro-units that maximize space.
University housing falls under the multifamily category, a sector where Fannie Mae and Freddie Mac remain the predominant lenders. Because they have very stringent due diligence requirements and guidelines, student housing project approval necessitates more attention to structural and environmental assessments. Important factors to consider include urban zoning, Phase I Environmental Site Assessments, Property Condition Assessments, energy audits, and possibly sustainability reports and engineering plans. Investment in a meticulous series of due diligence assessments from a trusted full-service consulting firm can facilitate faster evaluation and lender approval, property cost savings, safer student and faculty residential environments, and provide decisive leverage in presenting competitive pitches to universities for future construction bids.