Student Housing Business

MAY-JUN 2018

Student Housing Business is the voice of the student housing industry.

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DATA AND ANALYTICS May/June 2018 58 By the Numbers Data and analytics are not yet a perfect science, but companies are increasingly using data resources as competitive business tools. By Lynn Peisner T The student housing industry is in an early but promising phase of using data to both operate and deliver more sophisticated and profitable assets. Good data can answer many critical operations and growth questions: Where to develop, acquire and dispose; what amenities to offer; how to engineer a relevant community culture; how, when and where to market to prospective residents; even how to decorate furnished apartments, and much more. Data gathering and interpreting software and artificial intelligence tools are increasingly infiltrating commercial real estate, and student housing is started to catch up. Many compa- nies are leaning more heavily on third-party data firms as well as enhancing and expanding their own in-house data gathering and analysis capabilities. "We are big believers in data-driven deci- sion making," says Scott Barton, senior vice president of acquisitions and development for EdR. Barton focuses primarily on EdR's off- campus portfolio. "Data has become a com- petitive aspect of the business. If data can help you choose the right universities and, just as importantly, avoid the wrong universities, then you have essentially taken care of the asset allocation portion of your investment strategy. The most important decision we can make is whether or not to enter a given market." Enrollment growth, the on- and off-campus supply pipelines, and historical rent growth are a few of the "greatest hits" of data points traditionally evaluated by most companies to make investment decisions. But the onion can be peeled back much more these days, and old-guard, gut-level decision-making is giving way to a more scientific method. "Data can certainly help lead us to the large decision of whether or not to invest," Barton says. "Beyond that, just to use the number of off-campus undergrads at a campus as an example, that data might lead us to decisions regarding unit mix or amenity set and even marketing strategy." The qualitative and quantitative amounts of data available are seemingly endless these days, so the focus today is on ensuring accu- racy and on sophisticated interpretations of the data. Many in the industry concede having doubts about whether the data they collect and receive is perfectly accurate. Accuracy is obviously important, but it's even more important when measuring student properties. "Because there are fewer assets and the markets are so much smaller than traditional multifamily, the impact of something being inaccurate when you aggregate, even just by one property, can skew an entire trend in a market," says Taylor Gunn, director of student housing for Axiometrics. "We have a team dedicated to quality assurance because if you're looking forward and you're forecasting a mar- ket or property, if you have incorrect numbers upon ini- tial input then it potentially pushes people to make the wrong decision. Our clients push us all the time to make sure our data is accurate because it may not just affect their decisions, it could affect existing assets or the confidence of investors." Data can be messy, hard to interpret and can sometimes be reported or presented inconsis- tently. But two reasons loom larger above the rest in explaining inaccurate data. The first is that data moves quickly. Old information, even if only a week or two old, can skew analyses. Accuracy is also challenged by some proper- ties' drive to maintain a competitive edge, which can prevent full disclosure to surveys and data-gathering firms. "If it's a really tough market, I don't think everyone shares 100 percent accurate informa- tion," says Stephen Mitchell, executive vice president of acquisitions and business devel- opment for Asset Campus Housing (ACH). "I think they're being guarded, and therefore in tough markets, you really have to take all of that quantitative data and then add a qualita- tive approach to it to come up with your deci- sions. Whereas I find that if you're in a market where it's extremely healthy and everybody's seeing rate growth, then pretty much every operator, including a locally owned and oper- ated deal, would be far more forthcoming with the information." With its management portfolio consisting of more than 120,000 beds, ACH is able to share data and insights collected at their properties as well as through other sources with cli- ents who are evaluating potential acquisitions or developments. They have learned how to ensure accuracy when information gathering becomes a challenge. "In tough markets, you have to continue to validate. If you think some data is 90 per- cent accurate, but you still have some doubts, track it for a number of weeks to find out if there's some statistical variance taking place that seems to be an anomaly. In a troubled mar- ket, someone's going to go in with a contrarian view and think, 'it's tough today, but it's not going to be tough tomorrow.' That's when it really takes a whole lot of extrapolation of the current data to predict exactly how a market or university will change." From a Reliable Source While they rely on internal data for most operational decisions, for market and national data, most companies acquire data through third-party firms, and Axiometrics serves a large swath of the industry. "We were one of the first companies to col- lect survey information in mass quantities and deliver that as a solution to the industry," Gunn says. The company began exploring student hous- ing data around 2011 by expanding its multi- family databases into student properties and university data sets, initially focusing on where the REITs were expanding and then building the number of market from there, based on client feedback. Axiometrics was acquired by multifamily property management software giant RealPage in 2017, and today Axiometrics provides data on more than 600 university markets and forecasts for 175 markets. Data comes in a multi-hued palette today. "The industry is becoming more data-centric, and some are moving toward what we refer to as assessing 'your data' versus 'our data' to help make even better decisions about their assets and portfolio," says Gunn. 'Your data' would be the internal data on- site staff is capturing through the leasing pro- cess as well as a multitude of other on-site components mixed with data obtained by a company's acquisitions and development teams, says Gunn. "Everyone in some shape or form is collecting data internally, whether TAYLOR GUNN Director of Student Housing, Axiometrics

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