Property Wire | Matthew Smith
All over the UK, investment in purpose-built student accommodation (PBSA) is growing. In Northampton, Assetz Capital has provided funding of £13.26m to transform a former retail store into over 200 student apartments; in Nottingham the Cassidy Group has announced plans to deliver over 3000 beds in the next two years. Investor interest is on the rise, and developers are looking to meet demand.
Recent data paints a picture of a resilient market with huge growth potential: Knight Frank found that investment in UK PBSA reached a record £7.2 billion in 2022. Of course, such a strong year for investment means the challenges and fall-backs are likely to be somewhat brushed under the carpet.
As investor appetite grows and developments spring up, there are parallels to be drawn between the slightly more mature BTR market and the UK student accommodation market – and perhaps lessons to be learnt.
A sense of community has quickly become a defining characteristic of BTR developments. This is partly achieved through communal spaces and various amenities – but also through focusing on services.
Indeed, we are now seeing projects which feature built-in flexible workspaces, communal living areas and studio fitness facilities, in addition to more boutique services: microbreweries, rental bike services, electric charging points.
A bevy of social-based perks are fast becoming typical in new office buildings – partly catalysed by the post-pandemic desire to push people back to offices, and a recognition that greater amenities were needed to make workspaces as attractive as people’s homes.
Free beer, mini-golf, video-games, or a rooftop dog-park may sound like distractions, but they are clear indicators of the creativity being brought to bear within the commercial real estate sector. Indeed, architects and real estate developers are pioneering new concepts aimed at hybrid workers, whose time is split between home and the office – one such trend is ‘resimercial’, which brings a homely aesthetic to bear on the typically professional space of the office.
Of course, at the heart of these changes is the desire for increased community atmosphere and collaboration, which BTR is establishing within the residential sector.
But a sense of community is arguably even more critical for PBSA than for BTR. Professionals may be driven by convenience and location more than the social perks – which are important, but ultimately supplementary.
However, the student experience is one typically geared around socialising and building new connections and networks.
Because of this, PBSA operators should look to provide shared spaces and help to schedule events that students can attend within their accommodation block. BTR demonstrated that housing was more than its function, and the same could be true for PBSA – a student room is not just for sleep and work (or drinking!).
It may be tempting to treat students as a monolith, but in reality they tend to be a more heterogenous group than BTR tenants. The typical 9-5 of professional living restricts communal
activity to the weekend or evening, which may result in staff being busier at those peak times. Adjusting living space to suit the differing needs of student groups is an easy way to achieve greater tenant satisfaction.
For example, music students may require more soundproofed rooms; for design and art students, well-lit studio space is needed. Placing the accommodation within the wider context of the students’ lives will increase value.
Community aside, both BTR and PBSA projects are remarkable for the service and convenience they provide to tenants. While New York buildings have long been served by doormen and concierges, the UK has not seen developments like this until recently. Now, parcel collection and storage, 24-hour maintenance, and other similar services are becoming commonplace.
It’s important for PBSA operators to ensure that tenant needs are catered for. This means using apps to allow maintenance requests, online payment and bookings – using tech to streamline the living experience can help providers stand out.
We at Grosvenor Systems recently embarked on a partnership with Spike Global and designed an integrated tenancy management solution, to help streamline the living experience.
Easy to use, with an intuitive interface, tenants can use the platform to view their tenancy, sign contracts and instantly communicate with lettings teams – which creates a smoother experience for both landlords and tenants. Tenant-engagement platforms can be a simple but effective way for PBSA operators to create a unique user experience.
Creating this tech-driven ecosystem for tenants is not only about satisfaction. It’s also a key route to driving efficiency and generating revenue.
For instance, built-in ‘discount’ offerings within an app can offer students an easy way to patronise local restaurants, shops, food stores or cinemas. Not only does this help provide them with greater roots in the local community, it incentivises increased spending and therefore provides a boost to local businesses.
Property owners and managers are facing numerous burdens currently as rising inflation and a potential recession bite. To focus on business growth – or prepare to weather the storm – it is essential that the administrative burden be eased and time drains identified and curtailed.
Property management systems and automated technology can achieve this and free up time for employees to focus on business improvement and creative solutions for tenants.
PBSA operators need to account for certain particularities necessitated by the alternative timings and structure of student life.
For instance, rent may not be collected monthly as it commonly is by BTR operators but instead scheduled to line up with term dates, or student loans.
A strong back-office tech system is required to cope with bulk movements, in terms of student arrivals falling on the same days. Likewise, proptech solutions can help to automate payment reminders, creating not only a more transparent process but a more efficient one.
It is perhaps BTR’s focus on the tenant experience that PBSA should most look to emulate.
Incorporating property management technology, embedding automation into processes, and creating a sense of community through services and amenities is the future for the sector – and will serve it in good stead.
Source: Property Wire
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