The vast universe of the student housing industry, home to millions of beds, holds beneath its surface an untapped potential, a silent majority that’s been overlooked for too long. This is the story of the Silent 65% and the promise it holds for the future of property management.
Understanding the Silent Majority
First, let’s paint a picture with some data. Picture a sprawling student population demanding housing, approximately 20M strong. Now, visualize the supply – about 8M private beds. A prominent 35% (2.8M beds) of this supply is what we know as Purpose Built Student Housing (PBSH). They are the visible, vocal majority. But what about the Silent 65% or the 5.2M beds? They lie in wait, lurking in the shadows, underserved and undervalued.
Three Approaches to Property Management
Diving deeper into the industry’s workings, property management practices largely fall into three categories:
- Vertically Integrated Property Management: Here, property management and asset management/ownership are fused. Property management, in this model, often becomes a mere cost center, putting a premium on the return on investment to the ownership.
- Captive Property Management: Though appearing as third-party on the surface, this model isn’t much different from the vertically integrated approach. The undercurrents of ownership often seek acquisition of managed assets, blurring the true focus on property management.
- True Third-Party Property Management: This model, devoid of any safety nets, focuses sharply on profitability. It’s capitalism in its purest form. If the property isn’t managed effectively, the relationship ends. This honest, clear-cut approach motivates superior service, maximizing benefits for all parties involved.
The Frugal Revolution
Being frugal is not synonymous with being cheap. It is about resource optimization. In the world of third-party property management, being frugal means streamlining processes, challenging outdated norms, and driving efficiency. It’s about getting more done with less. Such an approach not only results in optimized NOI but also encourages a work culture that’s proactive and productive.
Tapping into the Silent 65%
Historically, the Silent 65% has been managed by localized outfits, either vertically integrated or third-party. However, as competition intensifies and cap rates compress, there’s a growing need to devise scalable, efficient, and cost-effective models to cater to this silent majority. This is where companies like Granite come into play.
Granite’s strategy is simple yet transformative:
- Staff costs are borne by the company, motivating efficiency.
- A slightly higher property management fee results in overall lower costs due to centralized operations.
- Only tasks optimized for local execution are left to localized staff.
- Maintenance is streamlined and billable by the minute.
- The focus is on achieving a fair return, rather than aiming for exaggerated property-specific profits.
Granite’s mission is clear: Improve property NOI, reward employees handsomely, and disrupt the traditional norms of the industry. They’re here to make a difference, and the time is now.
Conclusion
The student housing industry is on the cusp of a revolution. As the Silent 65% beckons, companies equipped with a frugal, efficient, and transformative approach are poised to lead the charge. It’s time for the industry to sit up, take notice, and redefine its future. For those willing to adapt, innovate, and embrace change, the rewards are immense.