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P3 delivery – a strong solution to student housing in a tight economy

Will private funding provide the funds necessary to meet the demands of today’s public institutions?

I attended the Association of College and University Housing Officers – International (ACUHO-I) Conference in Seattle the first part of July, then headed to Montreal for the National Association of College and University Business Officers (NACUBO) Conference the following week. I have attended the ACUHO-I conference for the past eight years; it’s a good time to network with institutional housing officers and provides great insight into the future direction of the institutional housing market. This was my first year attending the NACUBO conference, and I wanted to experience it, since I’ve heard it’s a great place to network with institutional business officers.  We’ve seen a huge increase in the number of alternative delivery student housing projects over the last five years, and I expect this trend to continue into the next five years. As a national leader in student housing design, I wanted to gain more insight into how the leadership at these institutions feel about alternative delivery – and hear first-hand what is working, and what isn’t.    

What’s new at ACUHO-I?
The ACUHO-I Conference is an annual, international conference that brings together the key decision makers from universities, development companies, consulting groups, and some financial institutions. The one thing they have in common? These decision makers from around the world, are interested in the alternative delivery and funding approach, especially as it applies to student housing. While always well-attended, this year’s conference saw record numbers for the 30+ year organization, with close to 4,000 in attendance. 

While a very diverse set of educational sessions were provided, central themes were the rising student population, the lack of funding to meet the need for student housing to accommodate the increase in students, and escalation in construction costs across the country. What I discovered during my many conversations with others during the conference, is that this is an international issue, not just domestic. The Public Private Partnership (P3) project delivery method is heavily debated, and some resistance remains among many educational institutions’ housing officers.  Why? They are concerned about project quality when it’s managed and produced by private developers. I did get a strong sense that, as the P3 model and P3 developers mature in the US, and successful projects continue to grow across the country, the number of housing officers in support of P3 will grow. Many eyes are on the University of California, Merced and the University System of Georgia - two of the largest, current P3 developments in the country, to gauge success of their complex, large projects and therefore, help set the tone for the future of P3 procurement.

The UC Merced and University System of Georgia are a new wave in large-scale P3 delivery, and have many moving parts that will need to fall in to place over the next 5-7 years.  Having spoken with several people involved from both projects, there are certain steps they wished they had done differently. This includes providing individual design teams to each campus, spreading the work out over more phases so as to not flood the construction market and gain better pricing, and assigning individual program managers to each campus.  I expect we will see several of these steps implemented in the anticipated, 15,000+ bed P3 housing procurement across the University of California and California State System in the coming year.

What did I learn at NACUBO?
While ACUHO-I is attended by housing facility managers and operators of facilities, the NACUBO conference is attended by parties responsible for funding and/or funding approval for housing projects. Similar to the housing officers I spoke with at ACUHO-I, the business officers had many of the same concerns. The lack of funding from state or government entities for academic facilities has required business officers to pull revenue from housing and, therefore, placed a heavy burden on the officers to meet the growing demand in other ways. Unlike many of the housing officers, a larger number of the business officers are in support of the alternative funding models such as P3, to solve this issue. They are also concerned about providing a high-quality project, however, they feel much more comfortable in the quality of product being delivered today, compared to 15-20 years ago. Like I discovered during the ACUHO-I conference, this is also an international problem among the business officers. I had several lengthy discussions with a business officer from South Africa and a developer client with Shikun & Binui. I found it interesting that the man from South Africa commented, “I could fill 2,000 beds today, if only I had the funds and means to build the buildings.” Hmmm…seems like the demand is there – but the funding problem truly needs a solution, and fast. Perhaps it’s one that the P3 model could solve rather harmlessly.

I look forward to the challenges the future brings with the development of alternative funding and delivery models such as P3. The student housing market will only become stronger and I am glad my peers at Stantec embrace these concepts with me. Bill Bayless, CEO of the largest private student housing developer in the US, American Campus Communities, recently said, “We are only in the third inning of this already $5+ billion/annual industry.”  The next decade should provide a lot of opportunity.

Sean is a project director in Stantec’s Plano, TX office, and has been on the forefront of residence hall design for the past two decades.

Sean J. Studzinski, AIA, National Project Director – Residence Life

I look forward to the challenges the future brings with the development of alternative funding and delivery models such as P3. 

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