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Student housing plans will affect commuter campuses

If you think that student housing will not affect commuter campuses like Washtenaw Community College, think again. As a community college, WCC does not currently have on-campus housing. (The idea has been kicked around for years.) But that doesn’t mean that campus housing won’t have a major impact on WCC and campuses like it.

Student housing is going to be a monster. In fact, student housing has out-performed every other real estate sector in the past two years. And that’s hard to do, considering how well housing has performed overall in the past 24 months.

Overall, between now and 2031, developers expect to add nearly 750,000 new beds to the campus housing mix. Which means that campuses will need to come up with 750,000 students to fill those beds. And therein lies the problem. The Department of Education predicts that higher education enrollment will increase by just 400,000 in that same timeframe.

Undergraduate enrollment is dropping, and it doesn’t matter whether you’re looking at two-year colleges, four-year-colleges or for-profit colleges.
You may be tempted to write this off as a side effect of the pandemic. While enrollment is certainly sliding during the pandemic, it was also sliding before the pandemic. It will continue to slide when the pandemic ends.

Student housing will drive enrollment choices

The student housing mess is going to be unpleasant for just about everyone involved. Much of the new student housing development is in the private sector. That will pit universities against developers for student housing dollars. They will also compete against local landlords who own existing housing stock around the campus. Universities may have tens or even hundreds of millions of dollars tied up in loans for on-campus housing. To make their student housing bonds work, they need students in their dorms and paying rent. Lots and lots of rent.

Developers will also put hundreds of millions of dollars down on new student housing developments. New developments will be loaded with “amenities” that not only attract students, but also increase the monthly rents they pay. The seemingly sudden interest in housing development comes from Trump-era tax code changes that provide incentives to real estate developers. The incentives focus on low-income housing and rest upon where the buildings are built. (And yes, areas occupied primarily by university students can be classified as “low-income neighborhoods.”)

So, these students that the real estate developers, universities, and local landlords are looking for will come from somewhere. Enticing students away from community colleges and enrolling them directly into four-year schools seems a likely strategy. Lowering admissions standards or increasing the number of students admitted will help schools with competitive admissions. It won’t, however, help community colleges, which take everyone.

Commuter schools may get edged out

Competition for the 18-22 year old crowd will become fierce. While community colleges certainly serve students in this age bracket, they may soon find enrolling them will become near impossible. And why? Because universities will have big student housing bills to pay, and the key to paying them is keeping housing full.

Just something to keep in mind the next time the discussion about campus student housing resurrects itself. It explains why competing for residential students won’t be a winning strategy for WCC. And it also means that WCC needs a strong strategy to attract and retain students who may be considering a four-year school.

Photo Credit: Rob Oo , via Flickr