Student Housing Business is the voice of the student housing industry.
Issue link: https://studenthousingbusiness.epubxp.com/i/564824
WHAT'S ON MY MIND JULY/AUGUST 2015 STUDENT HOUSING BUSINESS .COM 86 FINDING A FRIEND IN RETAIL Early, strategic planning can turn retail from villain to BFF. By Matt Stein S Some of you reading this were in attendance at the 7th Annual Interface Student Housing Conference in Austin, Texas, in April; if you didn't make it, defnitely mark your calendar for next year. It was no surprise that the agenda was jam-packed with insightful panel discussions from industry leaders on a variety of topics. I had the pleasure of sharing my thoughts during the "Retail, Dining and the Mixed-Use Revolution" panel, attended a number of sessions and even found time to enjoy some of Austin's famous nightlife. I was excited to attend "The Power Panel," as hearing from senior leadership at some of the most active frms in our space is always insightful. The panel included a lively dis- cussion on the current situation and future potential of our sector. Amongst the dis- course, I was surprised to hear that some still fear the unknown — retail. Retail has been designed as a part of many urban and even on-campus student housing proper- ties as a way to generate additional revenue and bring amenities to students. While the student housing community has a nuanced skillset in developing residential experienc- es by and large, they often struggle with comprehending how to conceptualize, plan, underwrite and integrate retail into projects. As someone who is solely focused on bring- ing retail to college campuses and towns, I am here to tell you that retail does not have to be the enemy; in fact, when planned properly, retail can serve as an amenity for residents, anchor neighborhoods to foster future development and provide additional cash fow. At the end of the day, if you want to be friends with retail, you need to spend time with it and not just call when you need something. Most of us have spent a great deal of time on college campuses. We all appreciate the value in the retail experiences we receive in each of these unique college towns. Such variety speaks to the character of each com- munity. Certain retailers have become insti- tutions in their communities. Take for exam- ple Ye Olde College Diner in State College, Pennsylvania, or Zingerman's Delicatessen in Ann Arbor, Michigan; both are not only iconic eateries that service their local com- munity, but they also drive in tourists from around the country and echo the aura of their respective towns. While these types of institutions do exist, areas in and around universities are still often under-retailed. This can result in signif- icant, pent-up demand for services, creating an opportunity for retailers. Traditionally, we see development in the university setting focused primarily on beds, leaving retail and market amenities as an afterthought. When discussions related to retail occur earlier in the development process, planning yields realistic underwriting, creative and diverse merchandising, and ultimately, a better end product that can amenitize and diferentiate a project. Throughout the development continuum, from acquisition to construction, retail must be viewed as an integral part of a project; even if the revenue that retail generates is under 10 percent of the total cash fow, as is often the case. To make projects as efcient as possible, retail space should be designed purposefully: vented food users on end caps, appropriate loading and trash solutions, thoughtful ceiling heights and appropriate store frontage, etc. Simply stated, students, parents, faculty, staf and local residents are making assumptions about the residential environment above based upon the qual- ity and character of the retail on the ground foor. Just as architectural materials, interior fnish outs, ftness centers, study lounges and other amenities are developed to ft a specifc space, so should retail. Furthermore, universities are progressively embracing their role as anchor institutions, and as a function of this realization, they are revaluing their responsibility to the sur- rounding communities. Thus, another aspect to consider is that retail in the collegiate environment should serve as an active and vibrant part of a community, which is spe- cifcally driven by and geared towards the university's diverse constituents. While on the topic of improving commu- nities, I want to examine how retail can improve pedestrian circulation. Selective placement of tenants in diferent areas can not only fll space, but activate and enliven a street. For example, cofee shops that open at the crack of dawn, in addition to other servic- es that remain open late night, provide addi- tional "eyes on the street" for commu- nities. Striving to fnd users who can provide a level of connectivity, diver- sity and authentic- ity to the tenant mix improves the overall experience for consumers and ultimately increases the vibrancy of the area. Some would even argue that retail tenants can improve the value of the beds above. When brainstorming strategies related to retail in student housing developments, con- sider what your tenants and the surrounding neighborhood will seek out; be it a cofee shop, ftness use, or food service, flling that niche within the market can help you attract the right tenants. At the end of the day, the higher education industry is an increasingly competitive envi- ronment. Forward-thinking organizations have always found ways to separate them- selves from the pack; whether it is a univer- sity coming up with public-private-partner- ship practices to help manage their budget and push revenue-generating projects to the private sector, developers creating oppor- tunities through strategic partnerships, or collaboration happening to create innovative products to serve consumers. By improving the experience of being on or around a cam- pus, universities inherently attract a higher quality of student, faculty/staf and perma- nent residents to their community, therefore attracting even more business and activity. By collaborating to alter the traditional point of view on retail, making it a primary compo- nent of development as opposed to a second- ary thought, a mixed-use student housing project can realize higher NOI, improve the surrounding community and diferentiate its product from competition in the market. SHB Matt Stein is vice president and director of MSC University (MSC U), a division of Philadelphia-based MSC Retail. MATT STEIN, Vice President and Director MSC University