Back when I was a leasing agent in college, we would go around once a quarter tour properties in the highly competitive student housing market to better understand the competitive situation. Our apartment complex at the time was the top choice for off campus housing, however, due to the demand for student housing, our limited capacity and other apartments’ special deals, we regularly faced threats from other off-campus housing complexes.
As we inconspicuously toured these competitors, these are three things we paid special attention to:
1️⃣ Rates and Floor Plans: our particular apartment had a mix of one, two and three-bedroom floor plans. Because of our access to the University as well as special services such as valet trash and a shuttle that conveniently and continuously takes students across the street to the campus, our rental rates were higher than our immediate competitors. We recognized this to be a threat, as prospective residents are very well likely to make the trade off between some convenience features for a lower rental rate. Our job was to understand how much lower in rent by floor plan our direct competitors were.
2️⃣ Concessions: Concessions are special arrangements or promotions offered to future residents or residents contemplating renewal. They can be free first month’s rent, discounted rent, an escalation-free renewal, etc. As best as we could understand the offers that our competitors were making, we could understand whether were were offering too much or not very competitive.
3️⃣ Current Occupancy: One of the key questions we could not afford to miss was to understand how filled the competitors’ units were during the high leasing season, which is summer time for student housing. If we learned that competitors were still 85% occupied there is a great chance that they will remain competitors for the duration of the summer. Note that in this particular student housing market at the time, there was a shortage of supply, which means all the good apartment complexes were fully leased before the end of the summer. This is not a bad problem to have unless you are renting below market, have a high loss to lease or are offering too much in concessions. Later on, there would be much more building on the campus and today, there are many more options for students.
This shortage of supply created strong demand for us and our competitors. With rents rising every year, we still managed to fill our units, but earlier in the summer and as far back as spring, the early prospects would come to tour the University, check out housing and even sign a lease months in advance. In order to remain competitive and get a great start to a great leasing season, we had to understand our competition and these three important features of their operations.
3 Lessons I Learned from Working in Student Housing
Even outside of student housing, paying attention to competitors’ rents, concessions and occupancy levels will give you a good gauge on the local market and how best to position yourself.
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