Insights

Creating Campus Value Through Developer-Led Student Housing

As colleges and universities across the country turned to remote learning at the outset of the pandemic in March 2020, a growing portfolio of new and existing student housing closed doors, reversing a trend to increase on-campus residential options. Now, as campuses have reopened this fall with health-safety protocols in place, student housing is again filling up—and campuses are again looking to increase housing going forward.

Many colleges faced financial setbacks during the pandemic, so the recent strategy of turning to developers to finance, design, and construct housing is again finding favor in campus planning and development offices.

The original reasons for developer-led housing are still relevant, if not more so now—from decreasing state financial support, to lack of developable property on dense urban campuses, to limited in-house resources in market-driven development, to managing risk of future enrollment changes.

Including developer-led housing in a college or university’s student housing portfolio is a smart decision. Developers have an advantage. They understand marketplace dynamics and can design for long-term flexibility of their real estate asset. They can build projects that provide what students want today, while working with the higher education institution to manage long-term occupancy.

When universities find the right developer/architect team, they can bring value that does not exceed the financial means of the project to support itself. Critical to the long-term success of a student-housing development is understanding the basic forces of costs, financing, and the housing marketplace—without compromising the unique student experience that the college or university is leveraging to differentiate itself from competitors.

Many of the most successful projects are part of mixed-used developments offering a variety of leased tenant spaces—in addition to the primary student housing leased by the college or university.

Several recent examples—both before the pandemic and currently on the horizon—illustrate how campuses are benefiting from developer-led housing.

Adding Housing with No Capital Investment

As with other universities, the University of Wisconsin has seen decreased financial support from State government across its multi-campus system. Needing both new residence halls and space for the fine arts, the University of Wisconsin-Milwaukee (UWM) looked at the historic Kenilworth Complex, a full-block, multi-building historic warehouse that it utilized for storage near its densely built urban campus. With no ability to finance the project, the University turned to the development community for financial solutions. After a competitive interview process, the University chose Weas Development, working with HGA and KBS Construction, to redevelop the warehouses into Kenilworth Square.

Familiar with the local market dynamics, the developer monetized the intrinsic value of the University’s land, buildings, parking, and potential retail and rent from students to finance the renovation. These potential income streams attracted investors. Weas renovated one building into the Peck Graduate School of the Arts and another connected building into a 400-bed graduate-student residence. The renovation also included a light-filled courtyard, ground-floor retail, and parking for students, faculty, and the public.

Through this developer-led agreement, the public University turned an aging warehouse into new housing and academic space, with minimal investment and risk.

In another instance at UWM, campus leadership wanted to improve the quality of its freshman experience and increase retention rate by requiring first-year students to live in residence halls. Yet the lack of available campus sites was an obstacle. Turning to the housing development community, the University Foundation partnered with the Mandel Group, which owned property near campus along the Milwaukee River bluff, to develop Cambridge Commons, a 700-bed student residence designed by HGA that combines living and classrooms space for freshmen and sophomores.

The live-learn residence encourages collaborative learning and a sense of community. Freshmen occupy two-bedroom suites with a shared bath. Sophomores live in apartment-style units, in which students share a living/dining/kitchen space. Each residence floor has lounges, study areas, and communal kitchens.

Many amenities elevate the standard dormitory offerings, with a sound-proof music rehearsal room, variety of seminar rooms for student and faculty to meet for credit classes, cafeteria with computer terminals, fitness center, coffee shop, street-front retail outlets, landscaped courtyard, and 100-car underground parking garage.

Through the development process, Mandel Group won a student-housing zoning variance for the brownfield site and achieved LEED Gold. The University signed a lease with Mandel to house freshmen and sophomores, achieving their goals of having freshmen students living in residence halls and significantly improving their retention rates.

Similarly, at the University of Wisconsin-Platteville, the campus Real Estate Foundation worked with C.D. Smith as developer and builder for Rountree Commons, also designed by HGA. The residence hall supports the University’s long-term plans to increase student residential options for this growing campus of approximately 7,500 students in southwestern Wisconsin. The six-story, 620-bed residence includes private student suites, main-floor commons, convenience store, several lounges, two multipurpose rooms, media center, fitness center, laundry room, landscaped courtyard, and 36-space surface parking.

As with Cambridge Commons, the facility focused on amenities tailored to the student population to support a sense of community. The first-floor commons area features varied seating for relaxing, meeting with friends, or studying. The furnished student suites include 20 single Resident Assistant units and 150 two-bedroom units (with two beds per bedroom), shared kitchenette, shower room, and half-bath. Students have access to two study rooms and a lounge with microwave oven on each floor.

Diverse Partnership Models

The University of Minnesota-Rochester (UMR) took a slightly broader tactic when planning a student residence for its growing campus. Developed by G.H. Holdings and designed by HGA, 318 Commons is a mixed-use development that supports UMR students, residents, and business opportunities in downtown Rochester. The public-private development utilized the Rochester Local Sales Tax Initiative for partial funding. The nine-story, 237-resident building includes tenant space on the ground floor, campus-wide Student Life Center on the 2nd floor, classrooms on the lower level, student apartments on the 3rd through 8th floors, and market-rate apartments on the 9th floor.

In still another instance, student residences serve students from multiple higher education institutions in an urban area. Eleven25 at Pabst in Milwaukee restored an historic brewery from 1888 using historic tax credits. Developed by Blue Ribbon Management with HGA as the architect, the project serves students from multiple urban campuses, including UWM, Milwaukee School of Engineering, Marquette University, and Milwaukee Area Technical College. While the developer has taken on risk in attracting students, the facility is tailored to student life and experienced high occupancy rates in its first year.

Looking Forward

Ultimately, the developer-led team relieves campuses of large capital investments, bond obligations, and long-term risks. Developers know how to add market value to the building program—such as leasable commercial space that enhances the urban setting and student experience. Given the shifting financial resources within higher education as campuses look beyond the pandemic, colleges and universities may continue to turn to developers and their architecture teams to finance and construct student housing cost-effectively—benefiting the student, campus, and neighborhood.