Private dorms compete with lavish perks

Use partnerships with consumer companies to distinguish themselves

Private student housing companies are entering partnerships with corporate marketers in an attempt to increase their appeal to college students, Laura Kusisto reports for the Wall Street Journal.

In 2014, student housing grew by 63,000 beds—more than it ever has before. In 2010, it grew by just 18,000 beds.

"Student housing is overall very competitive and each development that comes out of the ground is trying to one-up the other," says Alexander Goldfarb, an analyst at Sandler O'Neill + Partners.

Through the partnerships, the housing companies distinguish themselves by offering perks, and the consumer organizations reach their target market.

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For example, at Kayne Anderson Real Estate Advisors' 4th Street Commons, an off-campus housing unit near Florida International University, residents receive discounts on Uber, two-hours on bike-share Zagster, and free Interscope Records concerts. The real estate company's other 29 properties offer similar benefits as well.

"This is an amenity with no upfront overhead and we think it's a tremendous advantage to students," says Al Rabil, Kayne Anderson's CEO.

Typically, the promotional partnerships remain with off-campus housing run by private developers—not the schools themselves.

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However, not all developers jump at such a chance. American Campus Communities, one of the largest, steers clear of the partnerships unless they offer an academic benefit, says CEO William Bayless Jr.

"We don't attempt to get into the middle of what a student is already immersed in," he said. "As soon as the next thing comes up, they're going to be into that. It's very dangerous for a student housing company to become a middleman in the consumer relationship" (Kusisto, Wall Street Journal, 9/8).

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