After articulating the strategic and programmatic objectives of a new college housing project, the next fundamental question any higher education institution must address before embarking on a campus housing project is one of demand. New housing may support an institution’s mission, but a data-based market demand analysis (or feasibility study) will determine if current and future levels of demand will attract residents and cover the project’s costs. Without this assessment, an institution could emerge financially exposed.
A comprehensive market demand analysis should include both quantitative and qualitative research. A combination of site evaluations, student surveys, stakeholder meetings and focus groups can provide the broad perspective an institution needs to create a clear action plan.
Developing the picture around projected demand
A comprehensive exercise will address four basic questions:
- How many beds can the program support?
To understand how many beds an institution will need, a study needs a good grasp of institutional demographics (today and in the coming years), local housing supply, and students’ current living situations. A comprehensive study must include an online survey to collect this data, but also much more. This data, coupled with potential site evaluations, will empower institutional decision-making regarding new college housing and how it may support students and the institution’s mission.
The study will also consider the housing options used by today’s students. Given an on-campus option, are they likely to continue to use off-campus housing? Are they living with family, contributing to family housing costs? With another student in a one-bedroom apartment? In their car (a sad and all-too-common experience today)? What does this experience look like for this student renter?
- What are residents’ preferences?
Focus groups and student surveys can help an institution decide whether to build residence halls or apartment-style communities. These analyses can also identify what new amenities might differentiate the school and attract the type of students the school needs to thrive.
During this analysis, it’s important to take a long view that accounts for changing generational preferences. The population of working Millennials around whom much of today’s housing stock was designed may have vastly different expectations than the current Generation Z or the pending Generation Alpha students who will live in the residence halls of the future. It is critical to build some flexibility and plan for future demographic shifts.
- What rates will be sustainable?
Key to the financial viability of a project, a study will also determine what students are paying for their housing today. To get an accurate picture, this calculation should factor in students’ distance from campus and their transportation costs. The cost of new college housing should also factor in the quality of the facilities, the convenience of being on-site, and the intangible benefits of being part of the academic community.
- How are similar institutions handling housing demand?
By examining how peer institutions and other schools are meeting student housing needs, an institution can establish a competitive advantage over peers. This analysis should consider a range of questions:
- What percentage of local or competitive/peer schools offer housing?
- How does this compare to the national average?
- What are the occupancy rates for those peer institutions?
- What options and amenities do they offer those students?
Assessing Institutional Readiness
Administrators have not pursued new college housing in the past for a variety of reasons, from its steep, up-front capital requirements to the risk of non-performance.
But the implications run deeper than pure financial exposure. To a large extent, a campus is being transformed from a workplace to a home. Institutions with housing are responsible for delivering comprehensive student services such as dining services, 24/7 security, counseling services and student life programming. When students live on campus, a school takes on a quasi-parental role that includes discipline, a new set of responsibilities around basic needs, and a range of new rules and safety procedures.
Moreover, the site selected for housing may require capital improvements beyond the residence hall. New sidewalks, exterior lighting, landscaping and other utilities and amenities may also be necessary to provide residents with an appealing and safe environment.
These risks and costs are not insignificant, and an effective study will highlight needs that go beyond just housing. Fortunately, a variety of funding models—including partnerships, grants, and referendums—may reduce the financial burden (see Chapter 3). Of course, these tools are not free. Often, they require commitment from the institution in return. Nevertheless, they can provide an acceptable and affordable path forward when there are few other options.
Ensuring financial feasibility
Once a plan is in place that includes projected costs and income, a higher education institution can move to the next step and begin exploring its funding options. While there is a wide range of funding models available today, they all include risk at varying levels which may or may not be tolerable. A trusted advisor will help the institution identify and then weigh the pros and cons of each against its short- and long-term goals, as well as its overall mission.
For more, download our full research on Starter Home: Preparing for Your First Campus Housing or register for our upcoming webinar.