Failing to deliver a new project before the start of the new academic year begins is a costly miss for student housing firms-and one that can haunt a project for years. However, the hurdles to delivering on time continue to grow along with the stakes.
The rise in higher-density and infill developments means student housing projects are getting much more complicated, which adds risk to the project timeline. Weather and labor are also contributing factors.
“The challenge is construction,” said Brian Dinerstein, president of The Dinerstein Companies, during a panel discussion at the 2017 NMHC Student Housing Conference & Expositions. “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 [in a project] needs to be aware of that. Everything takes longer.”
The labor scarcity in traditional multifamily is also being felt in student housing and is further compounded by the need to rebuild in Texas and Florida following Hurricanes Harvey and Irma. As a result, many student housing executives are building more cushion in to their construction schedules and moving completion dates way back.
“If school is slated to open August 20, we used to have completion contract dates of August 1,” said EdR CEO Randy Churchey during a panel discussion. “We’ve move that all the way back to June 1, and I’m not even sure that’s early enough.”
Repairs and renovations face many of the same timing challenges as bringing a new project online. However, more student housing firms are playing with the calendar to take advantage of school breaks and tweaking occupancy strategies to minimize risk. For example, some firms are completing renovations on rolling basis, moving residents into rooms that are already completed while their units are being upgraded. Several executives noted that these renovation strategy actually had a positive impact on renewals. Oftentimes, leasing agents can offer residents amenity or unit upgrades at no cost, if they sign up earlier than necessary, which locks in some degree of occupancy while the renovations are underway.