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New research highlights red flags for under-occupancy in university accommodation

by Francesca February 24, 2020February 24, 2020
written by Francesca February 24, 2020February 24, 2020
New research highlights red flags for under-occupancy in university accommodation

In a first of its kind, CUBO in collaboration with real estate advisors JLL, has conducted a snapshot survey into the occupancy rates in university-owned purpose built student accommodation (PBSA).

Until now, there has been no nationally collected data from which to identify trends in this area. Although not exhaustive (data was received in from 20 universities), the research seeks to better understand the factors that affect occupancy rates, identify trends in this area, and flag up useful indicators to institutions nationwide.

According to Jan Capper, CEO of CUBO, the findings found a mix of the expected and unexpected:

“It’s been a valuable and interesting opportunity to look at this area, especially in the context of the demographic dip in 18-year-olds, Brexit uncertainties, Government funding review and growth of the private sector – all reflected in the growing number of CUBO members reporting challenges around occupancy.

“We recognise that taking snapshots in this way is a simplified reflection of the year-round occupancy, but we consider them useful indicators that are easily understandable, quick to produce for our CUBO members, and relatively consistent across the institutions.”

Key findings of the research:

–        At the start of the research period (1 December 2017) a quarter of the universities had 100% occupancy while two-thirds had above 97%. The lower and higher ends of the rent ladder experienced the lowest initial occupancy.

–        Over the course of the year (up to 1 May 2018), 73% of halls experienced a drop in occupancy.

–        Interestingly, the largest fall in occupancy (35%) occurred in a residence with no communal facilities.

–        Older buildings and less well maintained had the lowest of occupancies. It seems that it is difficult to attract students to some older buildings and there was a clear pattern of these residences experiencing low occupancy. It is possible that outward appearance, despite some significant investment in the refurbishment of some of these buildings, has played a factor.

–        The worse the building, the more likely that students would move out mid-year if they had the chance to.

–        Those buildings with shared bathroom facilities were less popular.

–        In off-campus residences, there seemed no correlation between occupancy and availability of various on-site facilities, such as common room/social space, dedicated study room, computer room (computers provided), café or bar and games room for example: a surprising finding that needs further research.

–        Location was a factor, and the lowest performing halls were more likely to be further away from the campus and library. They were also towards the cheaper end of the ladder of rents in the city they related to, but despite the affordable rent, they were still low performing, so price is not an overriding factor for some students, who opted to live elsewhere.

–        It seemed that even positioning rents below the direct market-led rates does not guarantee occupancy. In fact, the lower the rent, the larger the reduction in occupancy occurred.

Robert Kingham, Director of Higher Education for JLL, commented on the findings:

“Many of the findings bear out what we are seeing across all of our work with universities, which is all around students’ flight to better-quality accommodation. Some of the findings were intriguingly counter-intuitive, though, and suggest that received wisdom about what makes a popular hall needs re-appraising. We look forward to continuing this research in more depth in 2020 – this kind of unique study is only possible through the strong collaboration of CUBO members.”

According to a recent report by HEPi in association with UPP, student accommodation is now worth around £53 billion here in the UK, typically backed by long-term institutional borrowing and characterised by a number of different models of provision.  The report also states that in Britain, in the academic year 2017-18, just over 80 per cent of full-time students left home for study. Forty-eight per cent of these students lived in purpose-built halls and 52 per cent lived in private rented accommodation.

JLL’s Student Housing Report 2019 sees these pressures increasing: despite a five year decline in domestic 18-year olds, the sector has seen an increase of 114,000 UK full-time students over the same period, while construction volumes have fallen by 25% in the last three years, limiting the amount of new supply and further compounding the supply side challenge.

The 2020 survey of CUBO members will take place in spring 2020 and all participants will receive an individualised report.

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