How are rents?
ORTH: We have seen consistently good rent growth–3 percent each year or better.
ADELMAN: Two to 4 percent. As tuition goes up every year, parents expect housing costs to go up along with that, whereas multifamily [rents] in general right now are flat.
How do you deal with parental expectations and data privacy?
ADELMAN: Privacy has become a huge issue. Resident data such as Social Security numbers and birthdates [is no longer available to] leasing agents and [other on-site staff], because they just don’t need that information. As far as managing the parental data, we choose not to do parental guarantees. … In this day and age, these kids have more than one parent or caregiver, and it becomes very complicated as to the involvement. We’ve had parents who were going through a divorce and wanted to know where their kids were. This is students’ first rental experience. Our job is to help them become good residents.
ORTH: We do require parental guarantees. … [The students] are financially responsible, and they are the leaseholder, but that parental guarantee gives confidence to our investors and to us. In terms of privacy issues, [we manage 23 properties for colleges, universities, or other institutional investors]. Every public university or state-sponsored school has to deal with privacy guidelines, so they’re very sensitive to how we are treating that data, which is hid in our system so people don’t have ready access to it. We do have an online portal where students can make payments or place work orders. If students want, parents can make payments for them, and they can elect to have that data viewed by parents, but virtually all the time, the students are making those payments themselves.
How do younger students differ from older students?
ADELMAN: Undergraduates come in with very high expectations. They’re used to their last home, which was their parents’ house, where everything was provided for them. As they become graduate students and young professionals, they have a better understanding of how the world works.
ORTH: We call it the student housing lifecycle. They come in as high school graduates and tend to look for a unit that’s similar to the old furnished dormitory. Then they go into their first off-campus apartment. … Their expectations moderate as they go through the cycle, and when they’re graduate students, it’s not that different from expectations that you and I might have.
Except that it would be cheaper, because they’re grad students.
ORTH: They would be looking for something less expensive. It’s not always necessarily cheaper. Certainly you still have graduate students today that are like the grad students of 10 years ago, scraping by, but with the massive shift of international students coming to this country for graduate school, [that has changed].
What do today’s students expect?
ORTH: Broadband Internet access is probably more important than the kitchen or even, in some respects, the bathroom. Students have an absolute expectation that they can walk into the unit at move-in, plug in their laptop, and either have broadband wireless or Ethernet connectivity. Then you have the amenities. The fitness center of 15 years ago was a bike, a treadmill, and some weight equipment. Today it’s going to absorb a major amount of your square footage in your clubhouse, or, if you’re in an urban high-rise, the first floor. [It might have] tanning beds. We have computer labs. [You might have] gaming rooms, with three to 10 large panel TVs that allow people to [play interactive computer games] with each other.
How much of this is being shaped by what’s happening in single-family homes, as houses become bigger and more luxurious?
ADELMAN: Nowadays, [kids have] their own rooms. I think that’s what’s led to the evolution of everyone having their own room in student housing. In my dorm in college, I shared a room with four guys. That just doesn’t exist today. … Colleges are hearing from students that their residential life experience is as important, if not more important, than their education.
Do you think it’s true for all colleges, even Ivy League schools?
ADELMAN: Absolutely, because they’re competing against each other. Part of that competition is, “Where am I living? What’s there to do?” We’re doing a mixed-use development for Franklin and Marshall College, and the goal is to create a vibrant community in the middle of Lancaster, Pa. If you’re a liberal arts student who has the grades and SATs to go to Franklin and Marshall, but there’s another school, with an urban setting and more activity, [which do you choose]? And how do you compete if you’re Franklin and Marshall? That’s why they tasked us to create something for them.