Technology's 'must-have' for student housing: in an effort to appeal to the technologically savvy students entering college today, some apartment owners are providing Wi-Fi at their properties, while others are taking a wait-and-see approach.

Apartment owners and developers face many challenges when investing in the student housing rental market, but when it comes to amenities, one high-tech feature is increasingly becoming a "must-have"--Wi-Fi. "It really is a no-brainer," said Barbara Gaffen, co-CEO of Northbrook, Ill.-based Prime Property Investors, which operates several campus properties, mostly in the Midwest. "Nothing these days gets built without it. You have to offer it to stay competitive in your market."

Gaffen said that at most campuses, today's students expect Wi-Fi (wireless Internet service) in their dorms and off campus. "Owners have to keep in mind that today's students don't necessarily want what 'we' used to want in terms of a house with four bedrooms and a bathroom. Today, they want their own bathroom--and they really want Wi-Fi."

Gaffen, in business since 1994 with co-CEO Michael Zaransky, said Prime Property Investors recently purchased a rental-over-retail community (built in 1999) that had just installed the technology, which allows its users to log into the Internet without phone or cable lines.

"When students are looking to move off campus, they ask about whether Wi-Fi is available. It's something you have to offer," Gaffen said.

Echo Boomers Help increase Demand

Gaffen said that with Echo Boomers (young adults age 18 and older) now entering college, she expects a spike in the demand for off-campus housing, especially that which offers Wi-Fi. She said many campuses would like to upgrade their dormitories to include Wi-Fi, but simply do not have the funds to do so. Or, she said, they are spending what funds they have on general renovation projects. "State budget cuts have not left much money for things like Wi-Fi installation," she said.

According to The Campus Computing Project--see www.campuscomputing.net/summaries/2004/index.html--technology funding is stabilizing in terms of the percentage of institutions reporting mid-year budget cuts. Just one-fifth (19.2 percent) of the institutions participating in the 2004 survey report mid-year budget cuts, down from one-third (32.4 percent) in the 2003 survey and 24.9 percent in 2002. Moreover, the mid-year budget cuts were significantly smaller this past year, averaging 1.5 percent, compared to 9.5 percent in 2003 and 7.2 percent in 2002.

While student housing amenity trends vary nationwide, many universities prefer, and in some cases require, students to carry a lap-top computer with wireless Interact capability. Students are then able to connect to the university's wireless network and can receive lecture notes and other classroom information on their computers.

A recent report publishing the results of a study by the National Multi Housing Council (NMHC) confirmed that the student housing market is a significant segment of the housing market. (See sidebar, page 36.) The number of Echo Boomers will soon reach 75 million, and more then ever, this demographic is choosing to go to college straight out of high school, Gaffen said, quoting the NMHC report.

Managing the System

Gaffen said the demand for Wi-Fi availability is not pricing her rents out of the market.

Her company recently purchased an 18-unit community in Champaign, Ill., near the University of Illinois, which had existing Wi-Fi infrastructure. She said that she figured just less than $25 per month into the rent for monthly Interact service. This does not include the cost of installing and maintaining a Wi-Fi network. Installation costs vary depending on the service company and the location and scope of the project.

"Every time I give a tour, I'm asked if we provide Interact service," said Lisa Frazar, Manager of Treehouse II Apartments in College Station, Texas. "I'm always quick to respond that we have high-speed wireless Internet service. This has given us an amenity that [some of] our neighbors do not offer. It's almost becoming a requirement to have it."

Frazar said that when choosing a wireless Internet provider, it is helpful to find a system that is managed offsite. "From a property manager's point of view, it is better that any problems are handled that way, and not by being routed through the management office," she said. "It's important to make sure that the system is virus and intruder protected and that a support center is available for residents to call, should they experience interference or any other problems."

Diane Allen, a Community Manager for both University Park and Kingston Rentals, which serve East Carolina University in Greenville, N.C., said "University Park was one of the first communities to go wireless in Greenville. Customer service was a prime consideration when choosing a provider; having toll-free support for our students was a must."

Cutting Edge, Or Is It?

When Wi-Fi service debuted in the mid-1990s, some of the systems were unstable and difficult to maintain. The signal that was delivered sometimes was unreliable because of outside interference. During those initial years, the level of market acceptance was minimal.

Jim Whitehead, Senior Regional Manager with Equity Residential, said one of his market-rate properties was involved in a test installation of Wi-Fi at the clubhouse. "The provider pulled the equipment within months because no residents had signed up," Whitehead said. "The test was run primarily to gauge customer demand."

Whitehead said any future applications of Wi-Fi will most likely come from a clearer understanding of true customer needs and desires.

Gary Blumberg, CPA, CAPS, President, SUH Management Co., Houston, is also keeping a watchful eye on ever-changing student housing needs.

"We retrofitted some of our properties with Wi-Fi and it worked OK," said Blumberg, who operates 12 communities nationwide and has plans to build four more. "We hard-wired all of our units, and that is working just fine for our students. We made Wi-Fi accessible by the pool and some kids liked that, but we're not seeing a huge request for it among our residents."

Blumberg, with more than 24 years in the industry, said he is pricing the cost of installing a Wi-Fi network at his new development projects. "Things move so fast, and students these days are changing their minds all the time," he said.

Blumberg said that despite not offering Wi-Fi at his student housing communities, some of his residents have equipped their own lap-tops to receive Wi-Fi. To do so, a student needs a lap-top that is capable of receiving the signal and some equipment that is available for a modest price at most retail electronics stores. Its installation is relatively simple. "There's nothing to it," Blumberg said. "We let then] do that, it doesn't affect us." Blumberg said it is definitely cheaper to retrofit an existing property with a wireless solution than with cable. "However, if you are building from the ground up, a fiber [wired] solution is less expensive and easier to operate," he said.

Jan Carroll, Senior Regional Vice President with United Dominion Realty Trust (UDRT), said UDRT tried wireless Internet at its market-rate communities in the early 1990s. "It did not go well and we have a lot of scar tissue from the endeavor," she said. "With the improvements in technology we might be willing to look at it again, as long as there have been marked improvements in the capabilities of the providers."

UDRT's "scar tissue" was the result of a lack of standards, which generally meant what equipment that was available was very difficult to use. With the problems that existed, it was difficult to set up a network and virtually impossible to set up a carrier-class network. Broad acceptance of clear Wi-Fi standards has made Wi-Fi more accessible.

RELATED ARTICLE: Wi-Fi use on campus: more than half of campuses have plans.

According to The Campus Computing Project, 2004 survey, "there continues to be gains regarding campus planning for and the deployment of wireless networks (Wi-Fi). As of Fall 2004, more than half (55.5 percent) of campuses report strategic plans for wireless networks, up from 45.5 percent in 2003 and 243 percent in 2001.

Four-fifths (81.1 percent) of the campuses participating in the 2004 survey report wireless LANs, up from 77.2 percent last year, 67.9 percent in 2002 and 29.6 percent in 2000.

One-fourth (19.8 percent) indicate that full-campus wireless networks are up and running at their institutions as of Fall 2004, compared to 14.2 percent in 2003 and just 3.8 percent in 2000. Across all sectors, the 2004 data reveal that wireless networks are available in more than a third (35.5 percent) of college classrooms, ranging from 47.4 percent in private universities to 24.8 percent in community colleges."

RELATED ARTICLE: NMHC: high-speed internet more available than expected.

With many of the 75 million "Echo Boomers" born between 1976 and 1994 headed to college this decade, student housing is becoming one of the apartment industry's most important niche opportunities. According to the report, Student Housing 101: Where are the Opportunities? by the National Multi Housing Council, at least 27 markets among the 64 surveyed have experienced housing shortages within the past two years, documenting substantial development, ownership and management opportunities for private apartment firms.

The report also shows university enrollment is generally on the rise across the nation. From 2000 to 2003, only seven of the 64 universities studied experienced negative enrollment trends.

And, the availability of high-speed Internet access was much higher than expected--87 percent of the properties surveyed were either wired for Internet access or reported that high-speed Internet is readily available in their markets via DSL or cable providers.

Anecdotal evidence from property owner interviews suggests that as many as 90 percent of students who have access to high-speed Internet actually take advantage of it. This is significantly higher than the 22 percent of all U.S. households that currently have high-speed Internet accounts. See www.nmhc.org to order the report.

RELATED ARTICLE: How much does it cost?

Tom Michaels, President of Madison Communities in Dallas, said the cost of installing a Wi-Fi system in new student housing construction is basically comparable to that of cable systems.

Michaels, whose firm currently is developing student housing with Wi-Fi in Stephensville, Texas, and Commerce, Texas, said that for Wi-Fi, there is about a $30,000 to $35,000 upfront cost and then about $10 per door per month for the service provider. "Of course, the more you pay upfront, the less you'll have to charge per month," Michaels said.

"Installing cable systems run about $35,000 to $65,000, depending on what you are tying in--a T1 line or a CAT-5."

Michaels said Wi-Fi is the trendy thing in student housing today, and that it is the better application when compared to cable. "But what concerns me is that technology changes so fast," he said. "What was cutting edge two years ago no longer is. And who is to say what will be cutting edge three or five years from now."

Michaels, who also has developed in Arkansas and Georgia, said he only contracts five- to 10-year agreements. His projects are typically about 150 to 200 apartment units, translating to about 200 to 350 beds.

"Another tough thing is that these days everybody is in the telecommunications business," Michaels said. "You have the Internet companies wanting to be in the phone business, the television companies in the cable business and the phone companies wanting to be in the cable business. Everyone is trying to be in everything."

Paul R. Bergeron is NAA's Director of Communications. He can be reached at 703/518-6141 ext. 137 or [e-mail]. Also contributing was Larry Duncan, a consultant serving the apartment industry and a contributor to UNITS and other industry publications. He is a member and Past Chairman of the National Supplier's Council. He can be reached at [e-mail].