Tag Archives: Student Housing

The Future of Student Housing; whats next for the sector?

I’m privileged to have been asked to speak at a major Student Housing conference in London today. The Property Week hosted event is in it’s 8th year and has sold out; we can expect to see well over 500 people there. I’ve spoken at other industry events on Student Living, but this is my first time here – and its widely regarded as the big one.

New Student Living project by WCECOne of WCEC’s current projects; currently in Planning.

It’s been another incredibly strong year for UK Student Living. It’s anticipated that the year will close with over £5.7bn of investment recorded; that’s bigger than ever before. However almost all of that is transactional activity of existing operational assets, not new development supply. There is still strong interest from investors and developers in building new product, but there are some challenges to overcome.

Most major university cities have strong supply already. There will always be opportunity for growth and diversification, but its not simple to do, despite what some might think. Location, location, location remains a major factor for Student Living; it is housing after all. Beyond that the image below outlines some of the issues which are affecting the viability of building new Student Living at the moment.PowerPoint PresentationThe basis of the problem is that the required capital investment is outweighing income potential, especially for the lower-mid level “affordable” offer.  This is arguably where the greatest volume of demand exists. It’s become much harder to make the numbers work. But some, who know what they are doing and create an angle, can make it stack up.

Premium/ Studio led projects work, with weekly rentals of £250+, but only a small proportion of students can afford £10k a year to live in an ultra cool pad. They also have their tuition fees and living expenses which could easily add another £15k to that.

In my talk and panel session, we’ll be exploring how developers can create a competitive edge through design led schemes. This is recognised as a key differentiator now, but its easy to make mistakes and follow established trends which wont create a distinct angle. I’ve seen some great projects delivered this year, in the UK regions, in London and also in Europe. Quality is consistently high on the agenda, but its so easy to overspend on delivering it – and in areas which are unnecessary I think.

Despite public perceptions, students are discerning customers, with needs and demands which reflect hotel quality living, as apposed to the traditional student digs – or a hostel type offer. They want to be engaged in a community environment which blends living, relaxing, socialising and studying. These are the essential ingredients for Student Living. Some of this is physical, but some is about the brand and the operational function as well.

The  challenge we all face in delivering new student living buildings is to create something which delivers quality in all areas, but which is also commercially viable and realistic. To do this takes experience and skill; it will consist of a considered blend of design, space, specifications and also operational strength.

My talk concludes with four areas which, in my opinion,  define how design can give new student living buildings a competitive edge…PowerPoint PresentationYou can see a copy of my presentation in .PDF format by  clicking on the image below…PowerPoint PresentationYou can also read an insightful Property Week publication on the changing dynamics of the student living sector by clicking here.

 

Want to talk more about student living design?…

WCEC Architects are working on a range of really dynamic student living projects at present; for both private developers and universities alike. Some of these are new-build, others are refurbishments/ conversions. We are designing new concepts which explore compact living ideas, along with reinventing the traditional cluster apartment. We are also designing premium studio led projects with market leading providers. The fact our team have been involved in over 16,000 beds in the last ten years demonstrates to our clients that we know our stuff. We can create and add value. You can contact me by email by filling out the form below

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The need for Student Housing quality standards?

Following the recent award of BD’s Carbuncle Cup to the UCL Student Housing development on Caledonian Road in London, the architectural press have created somewhat of a storm around the quality of student housing and design standards.

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Above: Calendonian Road, London

Personally I think the media are ten years too late for all this. I believe that in general the design quality of purpose built student housing has improved significantly from early generation developments. There are many reasons for this, not least of which the need for new developments to continually offer more than any existing student housing within a locale. I spoke at a conference back in May about this – you can see my talk by clicking here.

4526064725Above: Early 1st Generation purpose built student accommodation.

There is a continual debate about what contemporary student needs are and how that is designed into purpose built accommodation. Investors and developers remain attracted to student housing, but land values and capital build costs necessitate a relatively fine balance in terms of ensuring schemes are viable – and more importantly; fundable. The rental price point and ensuring maximum occupancy demand are clearly key factors as students pay upwards of £4500 per year for their ‘digs’.

Ultimately students who decide to occupy these buildings are essentially endorsing them by choosing to live there and pay rent. Therefore how relevant is any third party criticism of what others’ think’ is right or wrong?

To give this subject some wider context it is worth noting that the growth of student housing has been fuelled by a shift away from extremely poor quality student housing within HMO’s owned by single Landlords. This sort of accommodation has gained a reputation for shopping trolleys in gardens, damp/ cold homes, within student ghetto’s where transient population issues lead to social problems with owner-occupied homes. Purpose built student housing is a positive and necessary asset class. Students need to live somewhere and the UK higher education system is amongst the best in the world, delivering many economic benefits.

The Government have recently recognised the need to gain a better understanding of this asset class by forming a British Property Federation group, led by Unite MD Richard Simpson, to advise/ support Government on a wide range of policy matters affecting Students and their housing. You can find out more here. This was following the ‘perfect storm’ of 2012 where the sector felt a hit by the £9k fees hike, immigration laws changing and A-level scoring levels being adjusted. I know a number of people who sit on this group and I receive regular BPF communications on current issues being discussed.

One point of contention in the media this week is the size of bedrooms and more specifically their window sizes. On the Caledonian Road development a comparison has been made with a local prison and a suggestion that prisoners get better quality living accommodation than students. A fundamental difference is of course that students can get out when they want – and they choose and pay to live there!

A student bedroom generally serves 2-3 uses; desk based working, sleeping, relaxing (TV, gaming, social media, internet etc). This is fairly consistent with a domestic bedroom within a home. From my experience student bedroom window sizes are broadly in-line, if not better, than modern domestic homes. There are other factors which come into play when comparing purpose built student housing to domestic properties. Student housing buildings are intensely cellular in their floor layout planning. This is largely unavoidable and issues with security, fire separation and heating/ cooling these spaces are always an issue. Almost all doors must normally be closed preventing natural ventilation occurring. Bedroom windows are typically restricted in their opening due to a number of operational concerns with taller buildings. These issues directly influence the practical size of windows. Students also have an increasing range of on-site alternative spaces for daytime occupation. These include shared Kitchen/ Living rooms, common rooms, external amenity spaces, coffee lounges, gyms etc.

I think there are valid points to be made about the need for new student housing to be built of a suitable quality, both internally and externally. But I think this current media hype needs to be considered in a broader perspective. It seems to me that people are jumping on a band wagon here, with little actual knowledge or understanding of these buildings and how they operate.

There will always be exceptions, as with all building types, which stand out for criticism. It is inevitable that student housing would feature highly this year when you consider how strong this sector is whilst other remain slow/ dormant! But this should not open the flood gates for complete sector wide reviews and suggestions of regulatory policies being required.

Next Generation Student Living

I’ve just got back from London after attending the LD Events Student Housing Conference at the Congress Centre. I’ve been to this annual property conference for the last four years. This year however was slightly different as I was asked a few months ago to deliver a talk on ‘Design and Innovation‘ in the sector. This was a great opportunity for me and Lewis and Hickey to demonstrate our extensive experience and understanding of this impressive and mature asset class.

We have delivered over 11,000 bedrooms to date and have around 5000 bedrooms in development. These are pretty big numbers for us and it puts us in a small group of other Architects who have delivered this much.

P1Last night we had a great dinner with close colleagues from Jones Lang LaSalle, Savills, Interhospitality, HG Capital Investments, Balfour Beatty, Regal Property, Kaplan Colleges, Bouygues/ ULiving and Campus Living Villages. It was a good blend of people and backgrounds, with some informed and stimulating discussion on current opportunities in the sector.

The mood at the conference was pretty upbeat overall. The sector has been a bit ‘down’ following a perfect storm of challenges in 2012 which resulted in a reduction in student numbers and occupancy. For the sector this was a worry as suddenly national operators were reporting 85-90% occupancy when 98%+ had been the norm for a number of years. In the wider context, these dips were minimal, especially when you consider 100% asset voids in retail, industrial and office at present. Student Living is still attracting growing and significant investor interest with strong yields to be enjoyed.

The other big news, and recurring discussion today, was about Opal’s recent demise. I blogged about Opal a few weeks back (click here to see it). It was really good to hear both Bob Crompton and Charles Marshall reinforcing that Opal is/ was a strong and well respected business, and that their assets have never been distressed. Their problem was around their funding model and there was a genuine disappointment that Opal have paid the ultimate price. The impact of Opal seems to be strengthening the sector, rather than compromising it as some people were concerned about. Their operator brand strength though has suffered because of all the media coverage. As a result; Universities, Parents and Students will probably avoid Opal accommodation this coming year. This is unnecessary, but people will have their view on this. It was also good to see so many (ex)Opal people at the conference, all still working in the sector in different ways.

In my talk I focused on Branding and “student experience”, the evolution of interior design ideas/ products and the progression of design quality in the architecture. Student Living design has changed significantly in recent years and I believe we are now firmly in a second generation of design/ product.

Following my talk, I was a little overwhelmed by how many people acknowledged and thanked me for my summary. I didn’t anticipate this and I was humbled by the kind words. A couple of people have asked me for a copy of the presentation so I thought I’d post a link to it on here.

CLICK HERE TO VIEW MY PRESENTATION (it’s 7mb and in PDF format).

It was good to see so many close contacts at the conference, the sector has a real property ‘community’ and I feel privileged to be part of it, both personally and of course for my business Lewis and Hickey Architects.

In conclusion; it was a great event to be part of, and of course even better to meet many established contacts and also make some new ones. If you are looking at Student Living development and need some advice, or want to explore some design ideas, please don’t hesitate to get in contact with us. Some of our recent projects can be seen here.

You can also contact me directly by email nick.riley@lewishickey.com, I’d be delighted to talk to you.