In a 2018 interview with Multi-Housing News, Peak Campus President Jeff Githens talked about the shift in importance from the overall amenity race to customer service, a trend he says will continue in 2020 as well. At the time, Githens was optimistic about the sector’s growth and institutional investors’ interest in student housing.
Two years later, with a portfolio that increased from under 1,000 units to nearly 18,000, Peak Campus continues its expansion to new markets. Githens and the company’s COO, Casey Petersen, discuss the company’s first project in Seattle and share their approach in a challenging development environment.
Peak Campus, in a joint venture with Blue Vista Capital, recently acquired its first Seattle student apartment development site. What attracted you to the area?
Githens: We were attracted to this market primarily due to the University of Washington’s ranking as a top 20 premier public school. Its large growing enrollment base along with its relatively underserved off-campus market were also significant factors. This is complemented by its vibrant pedestrian centric U District campus town and Seattle location.
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Tell us more about the Seattle project.
Githens: Theory U District is contemplated to be a six- to seven-story structure with approximately 500 beds and an exceptional amenity package. It will have a contemporary design that focuses on the pedestrian experience and resident interaction in both its exterior and interior amenity spaces. The project is truly unique in its design and location, with its proximity to the university, convenient transit, the Greek Row and “The Ave”—U District’s primary commercial corridor.
When we last spoke in 2018, Peak Campus’ management portfolio was at about 850 units. How many units does the company have now? What are your expansion plans going forward?
Petersen: Peak Campus’ management portfolio is now over 50,000 beds, which is just under 18,000 units. Our strategy has always been to grow smart. From the start, we very deliberately designed our platform to be able to scale up as new opportunities present themselves. It has allowed us to be able to be responsive to the market and we see the market as continuing to be favorable for the space going forward.
Will we see the same amount of interest in student housing this year as we did over the past couple of years?
Githens: We feel that there will continue to be strong interest in student housing in major university markets from students, developers and investors. The interest will be strongest for pedestrian locations near Tier 1 university campuses. Projects at these locations continue to see the greatest demand—both from students and investors—occupancy and rent growth.
Name three major student housing trends for this year.
Petersen: A new focus on customer experience versus overblown amenities. Our internal focus groups would suggest that our customers certainly have expectations for apartments and amenities, but that the difference-maker in the long term is service-based.
Land prices and construction costs have driven up rents on new development product over the past several years and while certain markets can sustain those rents, we get concerned about the ability to continue to grow those top-of-market rents in the out years in all markets. We believe this will create an opportunity to identify opportunities that can appeal to a wider band of the market with a competitive product, an outstanding customer experience and a compelling price point.
We have already seen a number of projects cutting the cord with regard to cable television and we believe that trend will continue. This is something that can only be done in conjunction with the delivery of enough bandwidth to handle the streaming that will be taking place. The execution of these strategies will be very important in terms of both the technical delivery and the marketing of those changes to the customer.
What is your company’s resident retention strategy for 2020?
Petersen: Our resident retention strategy is very simple—if we deliver an experience for our customers that is friendly, clean and safe, then they will have no reason to leave. No one likes moving and we believe that if we do what we say we’re going to do, our customers will return the favor by staying with us as long as their academics will allow. If we don’t, they will explore other options. For us, move-in day is the first day of renewal season and we’re highly focused on making sure that we facilitate that positive experience from day one.
In the past years, multifamily properties, as well as student housing communities, have embraced tech, from resident screening to smart home technology. What role does technology play in your properties?
Petersen: There is no question, in the student housing space we are appealing to the most tech-savvy apartment renters in the marketplace—and the same applies to our team members. One of our most important core mindsets is our need to evolve. To that end, we will continue to be on the leading edge as it relates to embracing technology at our properties and in our management platform. Where in recent years smart apartment technology was seen as an amenity, going forward we believe it is becoming much more of an expectation.
The distinction will be how those types of technologies are deployed to create a differentiated experience for our residents. We believe that there are some very interesting things that are being developed and we’re going to continue to explore, test and deploy into our portfolio as opportunities come up.
What are your expectations from the student housing market in 2020?
Githens: We will continue to see a strong focus on infill/pedestrian-to-campus development in Tier 1 university markets for all of the reasons above. This will allow future infill/pedestrian-to-campus properties to appeal to a broader student market base at various price points.