The Importance of Market Surveys in Student Housing
Move-ins are done. Students, eager to learn and enjoying their lives away from home, are roaming through your community’s halls. Your onsite teams are kicking butt and taking names when it comes to managing resident life.
Things are sitting pretty — at least for a while.
Not too long after students move-in and start their academic year, the time comes to start thinking about the next batch of students moving in. What will the market look like one year from now? What pricing will reflect current and future market demands? Will that new development down the street — or even that property being renovated — be a competitor and impact leasing?
While these questions are easily answered in the traditional multifamily market, student housing is unique. There are particular challenges that come with attracting today’s college students and meeting their ever-growing list of expectations, while also performing under the limited timeframe available each year to sign new residents.
Student housing communities do resemble other multifamily properties in the need for accurate, up-to-date data about asking rents, concessions and the occupancy rates of their competitors. When student housing owners and operators don’t have this information, it is difficult to have a true understanding of the dynamics at play in their market. This keeps properties in the dark about whether rental rates are too high, too low or right where they should be.
There’s no doubt about the vital importance of comparative data, and the key is making sure you have an effective method for collecting it.
The Perils of Manual Market Surveys
The traditional method of compiling market surveys involves onsite associates calling comps to ask about rental rates, occupancy rates, etc. This information — if and when associates are able to collect it — is usually compiled into Excel spreadsheets and passed along to managers and executives to analyze.
There are several problems with this method. First, it can take onsite associates a whole lot of time to gather data. Often, they have to make repeated calls to the same property to be able to speak with someone who has the information they’re looking for. This is time they could be using to care for current residents and to handle other important responsibilities.
Secondly, associates often aren’t sufficiently prepared to ask the kinds of questions that will ensure the data they receive is accurate and represents a true apples-to-apples comparison with competing properties.
Thirdly, and probably most importantly, using Excel is only a snapshot in time. The limitations within Excel extend to trendlines which are a key component of student housing operations. The ability to analyze historical data and compare performance by week, month or quarter versus that seen during the previous school year is vital to knowing what actions to take. An Excel spreadsheet doesn’t easily offer a way to cover significant occupancy issues that need to be remedied immediately to ensure a strong performance year-over-year.
As for the compilation of data into spreadsheets, overworked and time-pressed team members may enter the information incorrectly. They can even waste time adjusting column widths and row heights to make the spreadsheets easier to read for others. After that, there’s the issue of version control. After a market survey is passed along for review, team members begin saving and emailing each other different versions of the same spreadsheet.
Forward-thinking operators are implementing solutions and processes that automate the collection of comparative data from other properties, freeing busy associates to tend to their many other responsibilities. They also are storing this information in cloud-based databases that give management, pricing and executive teams the ability to review and analyze the same data at any time. This eliminates the need for Excel spreadsheets to be passed around and means teams don’t have to deal with the confusion that stems from version-control issues.
The Importance of Micro and Macro Data
When student housing communities have a method for efficiently gathering accurate data from their competitors and have the tools to sufficiently analyze that information, they enjoy significant benefits. In the end, this kind of micro data is critical to truly understanding how any individual community is performing.
Macro data — such as the average rent or the average vacancy rate for an entire metro area — offers performance perspective. Ultimately, it’s only when you know the trends in your submarket and among your competitive set that you can assess how rents can and should be adjusted. As an example, if your property is located in a particularly booming neighborhood of Atlanta — such as Midtown — you can’t base your property’s pricing on the average rent in metro Atlanta. You need to know the rent dynamics in your immediate area and among your competitors.
In today’s competitive student housing environment, where owners and operators have invested considerable resources into cutting-edge design and amenities, communities face a lot of pressure to deliver strong revenue growth and significant return on investment. Having a modern process for conducting and analyzing market surveys is critical to optimizing revenues in all sorts of market conditions.Click here to read the full article