Student housing is about to enter its busy season. Here is how to weather the storm.
Next month, students will begin streaming back onto campus and into their apartments. If student housing operators did not start planning for this onslaught back in spring, they probably are out of luck.
“Companies that are starting to think about turning apartments and move-in in late June should prepare for a bumpy road,” says Alex O'Brien, President of Cardinal Group Companies.
Experienced apartment operations staff members know that turns will go more smoothly if planning begins in spring or even late winter. It starts with unit walks and inventory orders, according to O’Brien. He negotiates vendor contracts in May and order supplies in June.
“Most of our planning goes on in February and March,” says Lee Ryder, President and a Founder of University Communities. “That’s when we start to sign vendor contracts and figure out how much furniture we are going to need.”
For EDR, getting its supplier partners lined up early is the most important part of the process, says Lisa Hale-Meindl, a Senior Regional Director at the student housing REIT.
“They must have the right insurance and, in some tighter markets, you have to get them secured very early because there may be a good number of student housing properties in the market competing for their business,” Hale-Meindl says.
Those vendors need to have their own teams in place as well as backups in case something happens.
“Invariably, something goes wrong, no matter the best intentions,” Hale-Meindl says. “That requires having a backup or two for each vendor so delays do not occur.”
One key to successful student-apartment turns is getting them taken care of as soon as a bedroom is vacated.
“A lot of kids left [earlier in June],” Ryder says. “School is over. We are in the middle of actually turning them now.”
Most EDR leases end July 31 and school starts in mid- to late-August, depending on the college or university. EDR’s average renewal rate is approximately 30 percent, so it is turning approximately 70 percent of its beds during those two weeks.
This gives Hale-Meindl just two or maybe three weeks to prepare for move-ins, she says.
If a community is short staffed for any part of those two weeks, many student housing providers will ask associates from their corporate office to assist.
While scrubbing toilets and cleaning floors is hard work, Hale-Meindl says the corporate-level associates at EDR get excited about helping with the hectic schedule.
“It becomes a huge bonding experience,” Hale-Meindl says. “People get excited about wearing shorts and doing whatever it takes to get apartments ready.”
While the turn process can become a grind, Ryder thinks it serves as a significant barrier to entry for those wanting to own or operate off-campus student housing communities.
“It is definitely what keeps some multifamily groups out of student housing,” he says. “You have to be geared for turns in order to succeed. We like to think it is our moat that helps us to keep our competitive advantage.”