Navigating P3 and Privatized Student Housing: Key Considerations for Success

With colleges and universities experiencing higher student populations and more costly off-campus housing, on-campus and near-campus housing demand is surging. Public-Private-Partnerships (P3) and Privatized Student Housing (PSH) are two approaches available to Higher Education institutions to provide housing options, often on university grounds, without public funding or debt service.  The distinctions between PSH and P3 for Student Housing lie in their ownership, management, and financing, yet their common goal resides in the solutions they offer.

P3 & PSH has emerged as a compelling and resilient sector, valuable to institutions of higher education for speed to market and market incentives, and to developers and investors for a variety of factors:

• Student Housing is Still in High Demand: The demand for quality student housing remains strong, fueled by a steady increase in the number of students enrolling in colleges and universities as well as a more diverse student population.   
• More Stable Than Other Housing Markets: Student housing stands out in the real estate landscape as a relatively stable and recession-resistant sector. During economic downturns, the consistent demand for education keeps enrollment rates steady, ensuring a continuous stream of potential tenants.
• Investment Portfolios Continue to Target Student Housing: Real estate investors and institutions recognize the value of student housing as a reliable asset class. Many have incorporated student housing properties into their portfolios due to the sector’s consistent cash flows and long-term growth potential.
• Reduced Funding for Institutions: Many states and educational institutions are facing budget constraints, reduced funding, and higher interest rates.  This often leads institutions to explore privatized housing and public-private partnerships solutions to meet their students’ housing needs without straining their own financial resources.
• Both Ground Lease and Developer-Owned Land Options: The flexibility of land acquisition options, including ground leases and developer-owned land, allows investors to tailor their investments to suit their preferences and financial strategies.

New student housing options have maintained momentum in recent years in response to increased demand and trends in student housing offerings. Some of the notable trends in housing that have emerged include:

• More Single Bedroom Units: Students increasingly seek privacy and independence, prompting the development of more individual living spaces. These units provide a comfortable environment for focused study and relaxation.
• Smaller Clusters of Units: This design fosters a sense of community within the smaller groups, encouraging students to connect and build relationships with their peers.
• Housing for All Stages: Privatized student accommodation is no longer just for first-year students. It’s now catering to graduate students, non-traditional students, families, and visiting faculty members. This inclusivity reflects the diverse nature of today’s student populations. The Broadview at Vanderbilt is a good example of this trend with its mix of unit types, conference rooms, and 13,000 square foot co-lab.
• Student Awareness of Sustainability: Many PSH and P3 facilities are incorporating eco-friendly features such as energy-efficient lighting, renewable energy technologies, recycling programs, and sustainable building materials to align with students’ environmental values.
• Amenities and Dining/Grocery Options: PSH and Purpose-Built Student Accommodation (PBSA) providers are upping their game when it comes to amenities. Fitness centers, study lounges, saunas, pools, game rooms, and even on-site dining and grocery options are becoming standard, offering students convenience and a well-rounded living experience.