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Not your parent's dorm: Student housing gets more elaborate (and expensive)

The high-end world of student living can include jacuzzis, sand volleyball, and a more adult lifestyle

With students settling in on campuses across the country this month, it didn’t take long for "dorm goals" to become an online distraction. Images of Ole Miss freshman roommates Lindy Goodson and Abby Bozeman showing off their redecorated dorm room—filled with over-the-top style and white carpeting that resembles a pile of cotton balls—went from Buzzfeed to viral hit last week. While it may be easy to laugh, the two dorm decorators aren’t necessarily outliers in terms of making a greater investment in their campus living arrangements.

Dorm life, and college living, has experienced an upgrade over the last decade. Student expectations have risen, due in no small part to the rising cost of higher education, including an average $10,138 to $11,516 annually for room and board, according to the College Board. That can be enough for a condo or apartment near campus in many places, an increasingly common solution. This rising price tag means parents and their college-age kids are spending more on living expenses and dorm decor than ever before, while schools (and independent developers) are creating more high-tech, high-design dorms to provide a better college experience (and justify rising costs).

The days of cinder block walls and drab dorms with bunk beds are making way for a style that could be described as "adult lite," with upgraded dorms on campus, and privately run, well-appointed student housing facilities nearby, which rival starter apartments in big cities, even offering amenities such as jacuzzis and hot tubs.

"Five or ten years ago, it was usually a double-loaded corridor made out of cinder block," says David Belt, a developer and founder of Macro Sea whose recent projects include the G.27 Global Institute, an upscale student housing facility in Berlin that transformed a former car radio manufacturing plant. "The new thinking is, let’s make it more like an apartment. This is a great place to live. We have lounges and kitchens, and they’re not just student amenities, they’re amenities for people."

Filled with contemporary and vintage furniture, the G27 project paints a very idyllic picture of what student life can be. But new, more upscale living isn’t just found overseas. A combination of universities seeking to cut costs (and focus funds towards programming and education), expanding urban campuses, and higher expectations from coeds who grew up in an era of social media and customization has created a booming private development industry for student housing worth more than $4 billion annually. American Campus Communities, the largest player in the game, made $186 million in the second quarter of 2016, and has seen shares skyrocket 44 percent over the last year, according to a recent Bloomberg report.

This trend hasn’t touched every student, or every campus, and despite fancier, suite-style buildings with hotel-like amenities, administrators still remain focused on the bottom line. But for many, the expectation of higher room and board costs has presented a new model for college living and student-centric housing development.

Take the Hub developments, a series of off-campus, student-friendly housing developments in big college towns such as Madison, Wisconsin and Tucson, Arizona. The brainchild of Core Spaces and Managing Partner, Marc Lifshin, these properties were designed as entry-level housing that cater to both older college students and younger professionals, all located near campus but independent of the university. The apartments "redefine luxury downtown living," while also offering the "perfect atmosphere to help your student thrive."

Clicking around the website of the $70 million Madison property, which opened last fall, curious potential residents will come upon floor plans and pricing (studios start at $1,205) as well as some of the perks of the Hub lifestyle (street-level retail and restaurants, a well as sand volleyball courts, sauna, and recording studio).

According to Karen Herold, designer and founder of Studio K Creative in Chicago, who was hired to decorate Hub properties, in many ways, the interiors aren’t any different than a hotel, 10,000 square feet with plenty of amenity space. Pools, day beds, and hot tubs are common sights, and there’s stadium seating around a big-screen TV for watching the game.

"It’s all built around socializing," she says. "The idea is to make sure they’re really enjoying staying on the property."

For Herold, the competition, so to speak, is the rest of Madison; to put it another way, to keep students on or near campus, the Hub is designed to be appealing enough to not just show up regular college dorms, but compete with a city of entertainment options.

"Universities are looking to keep their students connected to campus, which is part of why you’re seeing so many new student housing communities being developed close to campus," said Troy Manson, the Chief Investing Office for University House Communities, in an interview with the Urban Land Institute. "Statistically speaking, the closer students live to campus, the more likely they are to succeed academically and to stay enrolled. And the closer a property is to campus, the more universities are going to want to be in tune with what’s going on there. "

These developments are taking advantage of an opening in the student housing market, and providing close, connected, and safe residences for students. For many larger schools, dorms only house a small percentage of students, and not every coed (or every coed’s parent) wants them to live in a regular apartment. That leaves a lot of space for privately managed student housing.

Universities are trying to make the most out of their existing dorm space, shrinking rooms, creating suite-like arrangements, and adding more common areas. And for the most part, they’re working on a tight budget. According to Mary Beth McGrew, Assoc. VP of Planning, Design, and Construction, and University Architect at University of Cincinnati, the school is a little more guarded about construction and renovations that would increase housing costs.

"We hold back a little bit, because we want to remain affordable for students in Ohio," she says. "It’s not that we don’t think it’s important, but we’re cautious about making student rent too high.

University of Cincinnati certainly can’t be scolded for not caring about high-quality architecture. After investing in an expansive new master plan in 1989, the school has steadily commissioned work by high-profiles names such as Thom Mayne, Frank Gehry, and Michael Graves have made it one of the foremost collection of modernist institutional architecture. But McGrew would rather spend on the commons, on shared facilities that benefit the student body, than, in effect, raise the rent. Room are interesting, she says, and often inside high-rise towers, due to the urban location. But they are utilitarian.

"We want them to have great places to live," she says, "and affordability is a very important part of going to college. When I went to school, we wouldn’t have dreamed of spending so much money. Who wants to leave school with so much loans?"

Private housing meets a need for schools, who are looking for new ways to house growing student populations without cutting into budgets for education and services. For instance, at the University of Minnesota, which has 51,853 students at its Minneapolis campus, roughly 7,000 live on campus, a little over 10,000 commute, and almost 28,000 find apartments on the open market. That still leaves almost 7,000 in private, off-campus housing.

With guaranteed occupancy, and parents often footing the bill, the buildings are great deals for investors. Coming at a time when downtown redevelopment has rebounded across the country, projects such as the Hub, located near prime downtown real estate, also help fuel urban development.

Numerous stereotypes about the millennial generation, such as the need for self-expression and the influence of social media, have been cited as reasons today’s students are interested in a slightly more polished, if not lavish, dorm or student apartment. According to Stephanie Hayman, the Chief Product and Merchandising Officer of Dormify, a site that sells furniture and housewares for students, a strong economy, and a ready-made market of affordable dorm accessories, means that students are spending more and more on dorm decor.

Even as a study by the National Retail Federation found general back-to-school spending has been trending downward, the average spend for decor has gone up, hitting $126 in 2015, the most since the study started in 2007, and a sizable jump from $96 in 2014. While that seems like a trivial amount, it’s important to keep in mind that in-campus dorms have strict rules for redecorating and damaging walls and windows, and that’s just the average. The site sees some students and parents spend upwards of $2,500 on what often amounts to temporary room decor.

With students spending more time and money decorating their rooms, the expectation for a personalized space that reflects their lifestyle and values has become more prevalent. Universities and architects have been paying attention. According to Adam Yarinksy, an architect with the New York-based firm Architecture Research Office (ARO), one of the biggest shifts in student housing is the way it’s catching up to the way people live today.

The residential college system of student living, the classic arrangements of small communities on campus, found on the pastoral grounds of schools such as Harvard and Oxford, isn’t new. But in keeping with bigger social and cultural transformations, dorms include more shared spaces and room for informal interaction and collaboration. The descriptions read straight out of a startup office, or coliving space.

Students want more of a contemporary, adult lifestyle on campus, says Yarinsky. When ARO completed a dorm for Tulane University, adding a demo kitchen to the 250-bed building may have seemed slightly extravagant. But with increased focus on healthy living and more freshman foodies entering school, it only makes sense that schools would offer better meal plans, as well as better kitchen access.

McGrew sees the same trends toward a healthier campus reshaping her school. Cincinnati, which has a campus located near the center of a big city, offers numerous transportation options, such as ride shares and bike shares.

"Students want a more sustainable campus," she says. "They care about energy conservation, walkability scores, better food and local sourcing. A much larger percentage of them are interested in a healthier lifestyle."

Yarinsky says many of his firm’s campus projects include collaborative workspaces that blur the line between what’s happening in companies and on campus. The demographic at school is going to be in the office soon, he says, and new dorms and student centers are making the transition seamless. The study center that ARO completed for Brown University could "easily be confused with a startup office."

For many campuses, recent construction sprees and crowded urban campuses means space has become limited, and this scarcity and higher density means higher real estate prices. Manson says that many space-constrained developers are looking up, meaning more expensive high-rise projects. Yarinsky agrees; during a recent project at the University of Cincinnati, an extension of Nippert Stadium, his team felt like they were working on a ship in a bottle.

"It was complicated as any project that we’ve done in New York City," he says of the expansion.

Going forward, the student housing faces numerous challenges, principally affordability.

"A lot of the development deals happening now cater to the top end of the market," says Chuck Meyer, the Principal of the Prudential Mortgage Capital Company and a vice Chair of the Student Housing Council. "We keep pushing the envelope on the per-bed rents, on the amenities: it’s almost a race to the top to provide nicer amenities to attract students, to fill the beds as quickly as possible. But it makes the developments costly and it necessitates charging high rents. In the industry, we keep asking ourselves: how much of the student population can afford to pay these rents?"

It’s a challenge to develop for the middle of the market, says Meyers, due to costs and cap rates. Renovating older structures might work, but in many cases, these potential renovations are far from the center of campus. It’s an opportunity and challenge the industry needs to figure out, he says.