The young people we build, manage and operate PBSA buildings for are changing. Gen Z is making way for Gen Alpha, yet are our buildings changing enough to keep up with them?
Whilst the headlines will lead us to BELIEVE there is a chronic supply and demand issue, are the numbers for students as desperate as the wider housing market and how can investors and developers within PBSA impact the wider living sectors? Will we see a greater convergence of our living classes and what might that look like for a developer and investor post 2030?
To answer these questions, we need to understand what students and graduates need and want from their accommodation and crucially, what are they willing to pay. Providing a product that is out of reach for the majority of domestic students will do little to stem the supply and demand issue and ultimately fall short of the expected financial returns.
Instead we need to look at the data of where students are living as an alternative to PBSA and what is driving them there and therefore what can we learn. HMOs and BTR are supporting a large segment of students which are taking up spaces that other renters could utilise and really start shifting the dial on the housing crisis. Viability has been impacted by planning constraints, cost of construction and borrowing and the speed of construction but now those well-meant developments are coming out of the ground in cities where the numbers have changed in those interim years and may not be as relevant anymore. Should we see more multi tenure shared living development with more flexible design elements to future-proof investments and reduce stranded assets?
The well-documented ‘Journey to a Million’ predicted by UCAS is now reducing to something more akin to 930,000 by 2030 but this doesn’t factor in students who will choose to stay living in their family homes or embark on alternatives to full-time university education. And whilst we applaud the increase in numbers of young people choosing a university education from disadvantaged backgrounds and care leavers, once their initial first year university accommodation funding is spent, what is their second- and third-year future? Where will they live? We have a responsibility to support all students in completing their degrees, and they can only do this if they have somewhere safe and secure to live. Successfully doing this also contributes to the wider economy with many graduates then staying in these cities and entering the local workforce.
Jade Chalmers, Head of Planning, Howard Kennedy said: "The planning system has a responsibility to ensure that all types of living schemes come forward as swiftly as possible so that planning is not seen as an obstacle of development but rather an enabler".
The rise of the studio flat, designed for international students now seems a little out of date. The assumption that international students must like them because they are booking them now appears to be a myth as when faced with an even playing field, they too are being attracted by other options such as BTR and cluster flats within PBSA. The cost-of-living situation is not a problem unique to the UK and the volatility of universities, and politics makes hedging your bets on one nationality a very risky tactic.
Gen Alpha are looking like they behave in a very different way to the generations before them, so how will this influence how the future home is designed? And can PBSA get their quick enough? 2030 is the Gen Alpha era so the sector needs innovation to ensure it stays relevant to a new age of renters. Architects, designers and developers should now be pushing the boundaries and reinventing for the future, but how does that sit with investment risk. If you aren’t already investigating what the lifestyles, habits and dreams of Gen Alpha are, there is a danger the future PBSA product will ultimately be outdated before they even get to uni.
Despite all of this, as an asset class PBSA remains strong and we will be looking to solutions to all of these challenges in our Future of PBSA in 2030 and Beyond Panel Series. While we should congratulate ourselves as a sector for showing incredible resilience in some challenging markets, it is time to work together as similar asset classes to deliver world class product that will cater for students and graduating young professionals that will keep them wanting and being able to rent.
Sarah Canning, Co-Founder of the Property Marketing Strategists is our guest author and co-host with Howard Kennedy at the Future of PBSA in 2030 and Beyond at Howard Kennedy on Wednesday 2 October.
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