In 2019, Queen’s university accepted 25,260 students.
It had total of 9,571 individuals working as faculty and staff members.
In addition to Queen’s, Kingston also has two other school’s — St. Lawrence College, and Royal Military College of Canada. But let’s just focus on Queen’s here.
It has 16 buildings on campus and one in construction opening in September 2022. The largest of the buildings — Victoria Hall — houses 900 students. The smallest — Graduate Residence — houses 80. All-together (with my rough estimate) Queen’s provide’s residence for 4,512 students.
Out of Queen’s students, 11.9% for undergraduate and 27.4% graduate of them were international students in 2019. More than 90% of first year students live in residence. Plus 95% of the student population comes from outside of Kingston. Meaning that every year, 20,748 students (not including the nine and a half thousand staff members) look for a place to stay in Kingston.
Where do 20,748 students go?
Around the campus, there are multiple buildings that house 100+ people: Princess Towers has 269 people with 84 studio apartments, 52 1 bedrooms, 59 2 bedrooms, and 5 3 bedrooms. Out of the 84 studio’s, only 7 are available and they rent for $900-$1100.
A big property management and investment firm — Homestead, got their start in Kingston, and they own a number of buildings around the city. Skyline has 157 people, with Bachelor apartments (on the first floor) going for $1,375 and 1 Bedroom’s renting for $1,600. Caravel has 135 people with one bedroom’s starting at $1,600. And Shipyards having 250 people with one bedroom’s starting with $1,700.
Just by browsing properties near the university, you will see 1 Bedroom’s and Bachelor suits, that are not furnished, older than 30 years, renting for as much as $1,900 — like the one on 267 Princess Street #107. There are tons of them and I will not bore you with examples.
There are two student housing communities that help students get housing — Kingston Student Housing Co-op, which advertises themselves as providing their residences with half the average rates in the city. And they are able to achieve that because they are a non-profit organization. They have 171 beds, in 21 properties. A bed costs $600 per month on a 12 month lease, $720 on a 8 month lease, and $900 on a four month lease.
Next up is Queen’s Community Housing. Queen’s has been purchasing downtown properties since the 1950’s to provide more housing for students. They have 2 buildings that together house 383 students. The An Clachan (is 3 buildings) houses 260 people, and provides the cheapest rate of $800 per month on a 12 month lease in an un-furnished 1bedroom unit. The John Orr Tower has 123 people and the cheapest rate they give is $810 per month on a 12 month lease in an unfurnished 1 bedroom. The entire building consists of only 1 bedrooms. If you get a 1 bedroom furnished for 8 month lease, that is $1,113 per month. And that’s community housing!
As the result of high, growing demand, and not enough supply, the prices go up to these crazy rates. And developers have began to take notice.
IN8 development group that focuses on developing student housing and condominiums in the downtown Waterloo Region. Interestingly, Kitchener-Waterloo area has about half of all purpose-built-off campus beds in Canada (39,178) which is about 20 thousand. So far IN8 developments have created 3 projects that have been completely sold out. They are developing another project in Waterloo — Sage Platinum I & II. But recently IN8 developments have had a new target — Kingston.
They are developing two projects in downtown Kingston that have amenities, location and pricing that is attractive to students. Sage Kingston will have 325 suites, 15 minutes away from the university, and the prices start from the mid $200’s. The Capitol is a very similar development — 10 minutes away from Queen’s, starting from the mid $200’s, and the rates start from $1350 for one bedroom, all the way to $2700 for a three bedroom.
“We are going after the luxury end that appeals to…well-off international students… it costs a lot of money to come to Canada to go to school. They [foreign students] want the highest quality accommodation and have [the] ability to pay.” — IN8 developments.
Why did Kingston attract IN8? According to them: “the downtown market sustains an almost 0% vacancy rate, the average rental prices for a 2 bedroom are $1,700 per month, despite the very basic and dated finishes, average household income is $87,428 (this is the top 90th percentile in Canada), and there has been a 37% increase in rental rates over the last 10 year in Kingston.”
Another developer — Podium Developments, has partnered with Secure Capital Partners Inc.,Blue Vista Capital Management LLC and OPTrust to develop purpose-built rentals in Kingston. Together, they are developing three different buildings. Unity Point which will have 400 new Units. 95 Princess Street, which will also have 400 new units. And 575 Princess Street, that will have 343 units with 551 beds.
Another interesting company that I found is HighPoint, Management & Developments, that owns 43 properties around Queen’s university. Together, those 43 properties house 544 students. And they are all leased out! The average lease extends to April 30th, 2021.
Let’s sidetrack from Kingston for a moment. In 2015, the Canada Pension Plan Investment Board began investing in operations of off-campus accommodations. They acquired a student housing portfolio worth US $1.1 billion with 13,666 beds across 20 universities. The interesting thing is that not a single investment was made in Canada, instead in the US and Britain. Why? According to a managing partner of a Toronto Real Estate Investment Trust — “Canada is 10 to 15 years behind other countries.” In January 2019, the Globe and Mail claimed that “only 3% of Canadian university students live in purpose-built, off-campus housing, compared to 10 to 12% in the United States and Britain, respectively… it is not a market that has been developed.”
Where are the other 97% living? Students are simply mixed into the regular renting population. That is why all of those buildings close to Queen’s are almost all leased out (lowest vacancy rate in the country) and why the prices are going for an average rate of $1400 for a shitty bedroom in a 50-year-old building somewhere in downtown Kingston!
Across Canada, there are a mere 121,164 on-campus beds and only 39,000 purpose-built, off-campus student rental beds (half of which are in Waterloo). Student housing demand is now in excess of 416,000 beds! Biggest demand is in Montreal. Just recently two hotels where converted into student housing.
An American REIT paid $125 million for two hotels in Montreal — Holiday Inn ($65 million) with 488 rooms, and the Delta Centre-Ville Hotel ($60 million) with 711 rooms.
In Windsor, Vancouver Group (which is based in Hamilton but call themselves that for some reason) bought the Riverside Inn (hotel) with Farhi Holdings Corporation in 2013 and now converted it to Club Riverside student residence The place is 19-floors with 207 rooms.
Kingston is not an outlier in the deficit of student housing. It’s the norm. Let’s take a moment to understand purpose-built student housing. Fred Pierce, a pioneer in the industry and the founder of Pierce Education Properties, gives his insight into this development niche:
“There are three factors (that are unique to student housing): the unit mix is designed for student occupancy, the property is operated and leased on a by-the-bed basis and units come fully furnished…the homes are typically three-and-four bedroom units with a bathroom in each bedroom…the lease is for the bed… (amenities are) state of the art technology. You have to have a very high-speed internet service, 24/7 fitness centre, resort-style swimming pool, and spas, multipurpose rooms that can be for yoga, or other activities, study rooms, etc.”
While looking through Pierce Education Properties, you can rarely find a 1 bedroom, instead its mostly 2–4 bedrooms that generate on average about a dollar per square foot. Here are some other prominent companies that focus on investing and building student built housing: PineCrest, Stark Enterprises, Campus Advantage, Landmark Properties, American Campus Advantage, Trinitas, EdR, Core Spaces, and many many more. They are all US based and operate in US.
Canada doesn’t have any major, established developers that focus on purpose-built-student housing.
PBSH developers help alleviate the stress on university towns by providing students with more and better living options.
“A purpose-built rental with 140,000 square feet of rental space can house approximately 220 people in 140 units. The same space will accommodate 450 students and can generate 30% more rent.” — Derek Lobo, head of SVN Rock Advisors Inc. Brokerage.
I’ll end off my brain-dump with a quote from Sam Zell:
“Opportunity is often embedded in the imbalance between supply and demand. It could be rising demand against flat or diminishing supply, or flat demand against shrinking supply…when there’s an imbalance, I look at where the two lines will intersect and then determine whether it is cheaper to buy or to build.”
Building more student-rentals could not only provide better living and studying conditions for the students in Universities, but also alleviate high-prices and low vacancy rates that burden emerging cities from developing faster and allowing its citizens to live affordably.