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Capstone Development Partners LLC, Birmingham, Ala., has worked with more than 60 colleges and universities nationwide to develop on- and off-campus student housing—often featuring commercial and parking components, with minimal impact on the owner’s debt capacity. In the following Q&A, Capstone Development Partners Principal Jeff Jones offers his insight on construction activity, financing trends and what contractors can bring to the table to win more work.

What does demand look like for student housing right now?

There is more off-campus supply than demand in an increasing number of markets, particularly at top-tier schools. On campus, the supply-demand equilibrium tends to stay better balanced.

Is there more activity at top-tier universities, mid-level schools or community colleges?

Off campus, the activity is highest in top-tier university markets. Interest in housing at community colleges is increasing, but these are the toughest projects to get financed and built. Institutions on the East and West coasts and in the South have been more active in terms of on-campus housing initiatives than the Midwest.

Are schools coming up with more innovative funding plans?
Financing is an increasingly important part of the equation, particularly among public institutions and systems trying to preserve and protect their bond rating and debt capacity (particularly for non-auxiliary academic projects). Many schools continue to look for alternative means of procuring and funding housing on campus. The number of public-private partnerships (P3s) with experienced, proven private sector developers and operators is steady to increasing. The number of universities considering new on-campus housing that is privately owned by a developer bringing cost-competitive capital financing is definitely increasing.

What do schools value most?

Typically, it has been institutional quality, sustainability and speed of delivery. Increasingly, they value creative financing, often through P3s, and a design-construction approach that balances quality, cost-efficiency and affordability for student tenants.

How can general contractors and subcontractors help deliver student housing projects more effectively?
Good preconstruction planning and cost estimating are very important, whether working directly with the university or with a developer. Getting these projects planned and approved takes time, so patience and a willingness to evaluate multiple options are important. And the ability to build using a variety of structural systems to meet budget and schedule demands is critical. Finally, student housing has an inflexible deadline for delivery, so schedule adherence, fast tracking and efficient coordination of trade work are among the keys to success.

What kind of competitive edge stands out when evaluating potential construction project partners?
Ideally, we look for a solid track record in student housing or multifamily construction, the ability to be cost-competitive, a team player, involvement very early in the planning of the project, and experience working on a developer-led design-build team. We also like contractors that can build all types of buildings—from wood frame to gauge metal, concrete to steel, apartments to residence halls and low-rise to high-rise communities.

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