Changing spaces: The future of student living
Keith White, Chairman, CRM Students, is in conversation with Andrew Jeffs, Partner, Business Services in this video interview. Further to their conversation, Keith shared his insights on how the student living and co-living market looks set to evolve, and how it might be impacted post-COVID-19.
There was once a time when students arrived at grubby halls of residence in September. You would be welcomed by a grumpy old man on reception who’d give you your key, tell you not to be naughty, would frequently return to complain that your room was a mess, but otherwise just left you to it.
The above is, or was, a stereotypical view of student living. Nonetheless, it was pretty much the view that dictated how businesses once approached student accommodation. Indeed, company leaders and investors alike often thought back to their own student days, vowing never to involve their business in a place of libertine antics the likes of which they once enjoyed.
As such, there was a time when CRM Students Ltd had very little competition in their market.
That all changed at the start of the last economic downturn in 2008. In times of great uncertainty, as we are now, investors saw the student accommodation market – starting as it did every year in September; students came in, paid their rent, and left again – as something to rely on.
In subsequent years, more competition entered the market and the accommodation being purpose built for students was transformed.
To give you some idea of the sea change in student provisions, consider these two points: 30-40 per cent of students do not drink; and if you look at most student accommodation these days, it’s more akin to a three- or four-star hotel than the aforementioned stereotype.
A hospitality business
“We don’t look at ourselves as a student business anymore,” says Keith White. “We are a hospitality and service provider, that happens to do that with students.”
Increases in tuition fees in 2012 changed the market, as students more and more felt like customers to the universities. At the same time their expectations for accommodation standards increased, especially international students who are a long way from home. For instance, CRM Students provides 100 Mb broadband in every room, as students run multiple, essential devices.
“We are expected to provide a high level of service now,” explains Keith. “We operate and behave in a similar way to a hotel, with reception staff and people there to make sure things work for you.”
Well-furnished study rooms, trendy lounges, hi-tech kitchens, cinema rooms, yoga rooms and on-site gyms all contribute to the community atmosphere that pervades student accommodation now. Creating a community, a sense of being and belonging in the building is key, particularly for international students who often stay through the year.
“People can enjoy living there and build relationships and friendships with lots of people,” says Keith.
Student and co-living spaces merge
Student living is a very different proposition now. Some of the lessons learnt have been applied by investors moving into the emerging co-living and build-to-rent offerings going on in the wider property market, currently helping to develop housing options for young professionals and those fresh out of college. So how does Keith see CRM Students’ future as a part of the wider co-living movement?
“Our view is that student and co-living is very much merging into just a living space,” Keith comments. “Subject to planning, it will become a place where younger people choose to live.”
The COVID-19 pandemic has forced some rethinking on providing more personal space to individuals, such as a private balcony, and room sizes are on the whole expected to increase as people spend more time home-working rather than use public transport to get to their place of work.
“We’re looking at a number of co-living sites and offering management services in that space,” continues Keith. “The only real difference is that while students move in in September and move out in May, June or July, with co-living spaces there is a constant tenant churn. So the key issue from co-living is how does one reduce that churn? Because that costs the investor money.”
One apparent solution for the co-living model is to use short term business and holiday traveller demand to back fill gaps in occupancy caused by churn. However, those tenants staying a few days will treat the building differently and jeopardise the dynamic of the community.
The future challenge will be to foster that community feeling so people stay for longer in co-living accommodation to deliver the investor’s expected yield rather than resort to a short-term fix.