The audience had so many great questions at the end of the webinar and we ran out of time to answer all of them. Below are some of the audience’s questions and Jay’s answers:

Q.  Do you think the student housing market is oversupplied?

A. In recent months, there have been plenty of panic-stricken articles about too much student housing coming online. Just a couple of years ago, this was the sector that had so little supply. These days, industry “experts” are sounding the gong that there is just too much. Yes, there are a lot more beds coming to the market this year than in previous years. And yes, there are some universities that are facing supply challenges. But we would not characterize the entire market as being oversupplied.

It’s extremely important to have a granular understanding of a specific market before sounding the oversupply alarm. Some universities are experiencing explosive enrollment and the number of beds coming online isn’t keeping up with that growth. On the other hand, other universities, which have seen a boost in supply with relatively flat enrollment, will struggle to absorb the extra beds.

Q. Where do you think student housing is in the development cycle? What inning is it in?

A. The answer is: It depends. Experts in the industry have varying opinions on this matter, with plenty of evidence to support these opinions. Several universities are reaching maturity in the development cycle, while others have room for more new product.

As it related to new supply located off campus, one thing we can say with certainty is that purpose-built student housing currently remains a small portion of the overall student living. Most students are either living on campus or in another type of product such as conventional apartments or single-family rentals. Still others are living at home with parents.

I do think at some point we’ll see overall development slow to a lower, but more consistent level. Construction activity will pause at some universities in the near term, but then pick up again in a couple years as demand improves.

Q. A lot of properties missed their delivery date last year. Will that happen again this year?

A. We are already hearing of properties that decided to push their delivery dates to 2015. I do expect to see more of this, as there continues to be a shortage of construction laborers. Once the property gets behind on its construction schedule, it is very difficult to get back on track. The labor shortage is also a huge topic for other residential types, such as conventional apartments and single-family homes, but they do not have to operate on the same tight delivery window as the student housing developers.

There are also delays at many permitting jurisdictions, and the reason relates to one of the factors behind the rise in construction costs. Remember, at the peak of the market in 2005 and 2006, there were more than 2 million residential units being permitted across the U.S. on a trailing 12-month basis, including single-family homes. There was a certain staff level in place to handle the bloated volume of units needing to be permitted and constructed during that period.

Many of those jobs were cut across the industry as the trailing 12-month total residential number fell below 600,000 units during the downturn. New residential development has ramped up over the past couple years, which has put a strain on the available resources. Among other things, it has resulted in an increase in construction costs and longer cycles during the permitting process.

I think another reason we heard of so many properties having delivery issues last year had to do with the sheer magnitude of properties in the pipeline. With so many projects being built, there are bound to be those that don’t reach their delivery date.

Q. What amenities do students want?

A. They like getting the most luxury possible for their money. Great pools and exterior social areas. Speed of internet is huge along with wifi throughout the property. They want the interior of their units to be nice, but how many of them are actually going to use that stainless steel stove in the kitchen? I’ve heard many stories of students moving out of their units without having ever used their ovens.

Now, those are the wants, but not all students can actually afford to live at properties with golf simulators and tiki decks. As we see in conventional types of housing, there is a place for Class B and C product within student housing.

The lower class grade means a scale back in amenities. In these cases, it becomes more important to focus on the things that really add value. For example, you might choose an A-grade pool area rather than washers and dryers that text the student when the laundry is finished. Or, knowing that students don’t cook much at home, skip the upgraded appliances and add more social events. Whatever you do, however, don’t skimp on the broadband or wifi connections.

Q. Which universities are performing the best right now?

A. University of Texas in Austin continues to be a top performer. Average rent growth is just below 4% and leasing velocity is strong. Other university markets might not show as strong of an overall rent growth or leasing pace, but there are success stories in practically every market.

Q. If you had to buy or build a property right now, where would you go?

A. I get this question a lot when I’m on the road talking with those in the industry. I’d put location and likelihood (or unlikelihood) of potential new competition at the top of my list.

Without giving away any secrets, I can say I’ve seen some very attractive deals when working with investors and developers. Some are in markets that have had a lot of supply deliver, but others are in markets that have no purpose-built, off-campus product.

In general, I like sites near universities. I like a university with enrollment growth, but that does not tell you everything about the demand. I like knowing there is little or no planned product on or off campus in the near future. I like a market with an overall steady or positive housing market, which typically relates back to job growth. I like a market where conventional apartments have a great occupancy rate and their owners are pushing rents. This gives the students fewer housing options.

Of course, everybody likes those things but they are tough to find all in one site. You do not necessarily need all of those conditions for a successful property, but they all help. For instance, one of our recent studies highlights the success of cottage-style properties, which are typically located more than a mile from campus. They might not have the proximity to campus, but other factors help them succeed.

Q: One of the problems with student housing that we confront this time of year is filling apartments during the three-month summer break. Can you give us any suggestions about how to increase occupancy at this time of year?

A: We hear this type of question a lot from conventional apartment owners operating in a university market. The more appropriate question is whether the decrease in occupancy over the summer is having an impact on your expected revenue. If not, you have the bonus of extra make-ready time. If so, you should charge a rental rate premium if the student is committing only to a nine-month lease. Most student housing properties we survey only offer 12-month leases to avoid the summer doldrums, but sometimes the owners will adjust their terms if they are having a slow leasing season.