Campus Advantage currently operates more than 60 properties, within 42 different student housing markets throughout the country. Of those 42 markets, the company operates more than one asset in 13 markets, and they are some of the most successful properties within the portfolio. Many student housing owners perceive operators who oversee multiple assets within the same market as having a potential conflict of interest, and skepticism has long been present when considering an operator who is already performing within a market. Is the better strategy to hire a student housing management company who is already successful within that market, or to hire a firm who will only be focused on one asset per market? What if the management firm has ownership interest in certain assets and not in others? How will employees ensure the property is a priority over other properties it manages within that same market? These are all valid questions, but what Campus Advantage has found time and time again, is that the more properties operated within the same market, the more market control an operator has within the space.
Management teams can take advantage of economies of scale when managing multiple communities within the same market. Properties within the same market, often referred to as “sister properties,” can share potential residents based on price point or their desired floor plan. Often a property will not have a certain floor plan available, and instead of the prospect going to a competing property, there is the opportunity for the asset to refer them to their sister property. Operating a single asset within any market has more challenges when acting solitarily. Operations teams are blind to competing properties’ ever-changing specials and concession offerings and overall leasing and marketing strategies as everyone is scrambling to the occupancy finish line. Contrarily, ownership groups that choose to have their property managed by an operator that is already established within the market are investing in market knowledge, experience, and collaborative idea-sharing.
Properties operated within the same market will often target a different demographic of students, and a different type of living experience. For example, Campus Advantage operated 4050 Lofts, 42North, and ON50 in Tampa, Florida. ON50 and 42North appealed to the price-conscious student looking for a living experience packed with resident and community events. However, 42North also had a majority of four-bedroom units, whereas ON50 had limited four-bedroom floor plans, so the two properties benefited from tabling next to each other at housing fairs and participating in homecoming parades together to save marketing dollars. This approach allowed them to split costs, ultimately reducing annual marketing spend, but the floor plan diversity enabled them to share prospects and cross-sell their unique floor plan offerings.
4050 Lofts appealed to students looking for a newer product with more privacy due to their bed-bath parity floor plans. A prospect touring 4050 Lofts, looking for a more price conscious option, was often referred to 42North and ON50 as an opportunity to still capture the lead when the price point at 4050 Lofts was too high. In turn, a student touring 42North who was looking for a more modern living experience closer to campus would have been referred to 4050 Lofts. Closing a lead will always be a strong leasing agent’s objective, but if the property simply doesn’t offer what the potential resident desires, sister properties can share their prospects through a referral system.
Properties benefit from having an “ally” in the market. In addition to potential resident referrals, having a sister property within the market offers ownership and staff valuable insight and support. Campus management teams who already operate in the market have historical data for budgeting, knowledge of tried-and-true marketing strategies, vendor contacts and often contract leverage, and employee experience. While properties within a market will always be competitors, they have the opportunity to learn and lean on one another for support when they are under the same operator.
Operating in close proximity to a sister property allows for significant cost savings. The annual turn process and corresponding expenses are substantially higher in the student housing industry due to by-the-bed leasing and constant turnover due to graduation. Campus property management groups that operate multiple assets within the same market can often negotiate lower painting, cleaning, and carpet cleaning contracts, in addition to purchasing bulk maintenance supplies and furniture. Sister properties also have the advantage of splitting large expenses like housing fair costs that have continuously increased in markets, or big event costs like a concert series to benefit both properties. Splitting travel costs and sharing shuttle expenses are also ways that owners can save on necessary expenses. Campus Advantage created an Area Manager position to oversee both of its Seattle properties rather than employing two separate property managers, reducing the overall payroll for both properties. Being able to relocate employees to another property within the market also provides employees with career advancement options for challenges and elevated new roles, which is extremely important for talent retention.
Management and staff are always working toward the same goal – 95%+ occupancy. One of the biggest concerns that Campus Advantage hears when asked about managing multiple assets within a market is conflict of interest. Owners wants to know that their community is an operator’s top priority, and rightfully so. So how does this work when multiple assets within a market are managed by the same operator? All properties in a market, whether they are sister properties or not, will always be working towards the same goal, which is to reach budgeted occupancy. As sister properties, they may refer prospects, share marketing ideas, and build out best practices together; however, their property-specific goals and corresponding rewards will continue to drive optimal and competitive performance. Campus Advantage structures employee bonuses and incentives based on a specific asset’s pre-leasing, occupancy, and net operating income (NOI) performance, to ensure the team working on that specific asset is motivated and focused on that property’s specific objectives.
Overall, the number of advantages to managing multiple assets within the same market greatly outweighs any foreseeable objections to this approach, and, to the contrary, can greatly benefit all assets involved in the sister-property approach.