Working with colleges and universities brings challenges that developers won’t face in any other part of the multifamily business. “It’s a different way of doing business,” says Cecil Phillips, chairman and CEO of Atlanta-based Place Properties. “That’s all there is to it.”


1. Taking school officials out for drinks and dinner won’t (or, at least, shouldn’t) work. “You have to be careful on schmoozing, because it cuts the other way,” Phillips says. “The universities don't want to be accused of anything.”

2. Patience is a virtue. If you work on campus, you have to be prepared to wait for consensus, or, at least, direction. “Every stakeholder in the university who touches [the project], from finance to residence life to the dean of students to the maintenance guy to the finance guy, has a seat at the table,” Phillips says. “You have to accommodate, reconcile, and resolve those different perspectives.”

3. Sticker shock is real.With the media inundating the public with stories about the rising costs of school, schools are getting concerned about costs. “We’re beginning to see the start of sticker shock with the public,” Phillips says. “Public universities are getting more and more sensitive to it. That means they don’t want private developers to get rich by charging higher and higher rents.”

4. You have to be willing to accept risk. As their budgets shrink, schools also want to push off some of the risk but gain a greater share of the reward. “That’s an inherent issue that’s difficult to overcome,” Phillips says. “The developer is taking all of the financial risk and they need a return. You just have [to be] sensitive and aware of that tension. A successful developer will be able to negotiate it.”

5. Not all schools are equal. Public and private schools may have different motivations for entering a public–private partnership. “Some of the private schools certainly follow procurement rules, but they can be more flexible than large publics,” says Daniel I. Bernstein, executive vice president and chief investment officer with Philadelphia-based Campus Apartments. “They aren’t following the state regulations that the publics follow.”

6. Schools like options. Jamie Wilhelm, executive vice president of public–private partnerships for Austin, Texas–based student housing REIT American Campus Communities(ACC), says his company brings multiple solutions to the table in design and finance. “There is a lot of customization that occurs,” he says. “We present schools with three, four, or five structures of finance to give them an opportunity to see what best fits their circumstances.”

7. Criticism is unwelcome. In some parts of real estate, criticizing competitors could help land a deal. That’s not the culture in student housing. “Negative advertising always backfires in a university environment,” says Mike Mouron, founder and president of Birmingham, Ala.–based Capstone Cos. “I don’t think anybody who has been around for more than three years is doing negative marketing.”

8. You’ll need cash. Responding to an RFP isn’t cheap. “RFPs are expensive to respond to because they ask for a lot of stuff,” Phillips says. “You have to confer with architects, engineers, and lawyers. Nobody pays you back if you don’t win.”

9. Hiring residential assistants (RAs) doesn’t hurt. Universities like working with people who can speak their language and understand their culture. Who better to hire than people who began working in college housing as students. “At ACC, student housing is in our corporate DNA,” Wilhelm says. “Bill Bayless [the firm’s CEO] and many senior managers began as RAs.”

10. Public–privates aren’t for everyone. Ted Rollins, co-chairman of the board and CEO of Charlotte, N.C.–based Campus Crest, has taken his student housing REIT public, but the company still stays off campus. He cites the bid situation (which he claims lowers returns), the land lease, strict school regulations, and profit sharing as reasons he avoids the niche. “I don’t think you need to go through that brain damage to make solid returns,” he says.

Les Shaver is a former senior editor of Multifamily Executive. Start a conversation with him @lshav22 on Twitter.