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Kirk Preiss, Principal and CFO of The Preiss Company, recently contributed to Student Housing Business Magazine’s online publication. Preiss’ two-part article entitled “The Emergence Of A New Asset Class – The Student Housing Industry” discussed the differences between conventional and student housing and the marketing, operational, and financial challenges that student housing faces.
According to Preiss, two powerful trends surfaced in the mid ‘90s that significantly changed the off-campus housing opportunity: university enrollments increased faster than their on-campus housing supply and new residents were more responsible, more environmentally conscientious than their predecessors, and regarded college as a year-round activity.
“These two trends produced a high demand for off-campus student housing from a high-quality resident,” says Preiss. “Student housing became a distinct asset class in the late ‘90s when national apartment developers began differentiating themselves from conventional apartments by offering private bathrooms with each bedroom, high-speed direct-connect Internet, and student-based amenities such as resort-style swimming pools, activity rooms, gyms, extra parking, and shuttles to the university. But what these national apartment developers soon learned was that there was a world of difference between managing a student housing apartment and managing a conventional apartment.”
Preiss says that the main difference between conventional and student housing is that the target market for student housing apartments is college students and not working families. Successful conventional apartments may have less than 10% of their residents move out, with move outs being spread out over the year. On the other hand, student housing apartments will experience 60 to 70% move outs every year with almost all of it occurring in May and July. Without significant marketing intensity all year, a student apartment could see a 60 or 70% drop in occupancy, which would be disastrous.
“There are three things that will ultimately define the success of a student apartment: its residents, a talented and dedicated staff, and a property that provides a clean and safe environment for its residents,” says Preiss. “Our challenge is great, but the reward is greater.”
The Preiss Company employs over 200 team members and is largest provider of off-campus student housing at North Carolina State University, Clemson University, Auburn University in Alabama, Coastal Carolina University in SC, and the University of Texas in Austin and the second largest provider at UNC Charlotte. The company was awarded the Steady Growth and Profitability Master Award by the Greater Raleigh Chamber of Commerce in 2009 and its South Carolina property was recently featured by Apartment Finance Today as one of the publication’s “13 Most Creative Deals of 2009”.
About The Preiss Company
Founded in 1987 by Donna Preiss, The Preiss Company (tpco.com) provides a wide range of services including acquisition, property management, due diligence, construction management, development, and consulting for multi-family real estate investments. Beginning its 23rd year, the company has formed over 50 partnerships and developed over 20 projects stretching from Maryland to Texas.
About Student Housing Business Magazine
France Publications, Inc. (studenthousingbusiness.com) is a growing business-to-business media company that offers an enthusiastic, creative and refreshing approach to publishing. As the leading publisher of commercial real estate magazines in the United States, France Publications currently offers 11 magazines that cater to all commercial property types to suit any reader in the industry.
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