Within one day, my house-mates and I were pulled into the whirlwind of the Kingston rental race: who can sign a house the fastest. Visiting a house one fine January morning led to a time-crunched panic, resulting in our group signing a house that -- after careful examination -- was unsuitable for our needs. In my opinion, external pressures such as the relentless student demand and popular university culture were the main factors behind our impulsive decision. Upcoming developments in the Queen's campus area, an increasing student population yet a static housing supply, and the recent shifts of university culture are all contributors to the rental madness in Kingston that will be further analyzed.
New developments, targeting students
After noticing a great shortage of student housing, the Planning Department of Queen's University issued for two new residences to be built, which should be in operation in the beginning of 2015. Observers and some speculators state that these new residences "do not fit with the general streetscape of the waterfront residences of King St." However, the ultimate goal of the $70 million investment is to relieve the stress of Queen's students who are not accepted to the on-campus dormitories by providing student housing conversions or off-campus spaces. Kingston landlords are threatened by the new developments, as a surge in the housing supply will reduce rent increases otherwise seen as a result of the growing student population.
Increasing demands on static supply
One cannot help but speculate, that these massive developments could be a response to rising demands for housing in the downtown Kingston area. Statistics Canada states that college and university enrolment in Canada has increased by 18 percent between the 2004-2005 school years and the 2009-2010 school years. From the phenomenal growth in enrolment, on-campus resources are not able to keep up with the demands. As a result, many real estate agencies are now looking towards a very specific niche of the university student. Investing in college-town real estate is a relatively new phenomenon, especially in comparison to the United States, which has mature establishments in venues such as Pittsburgh, Pennsylvania, which has one of the lowest breakeven horizons, at one year and eight months.Overseas investors have been buying student property as a safe, long-term investment since ambitious students from all across the nation will never cease to attain higher education. Additionally, the recent growth in REIT's has focused on student housing as their core business, which has attracted the attention of national pension institutions. It is clear that foreign and domestic investors alike are looking to secure long-term stable returns through student housing.
Canada's most recent venture in this sector would be Waterloo, Ontario, where the boom in student housing has accommodated 9000 beds within walking distance of the University of Waterloo and Wilfred Laurier University. This has galvanized much urban development in the city core, improving not only the university district, but social installments as well, such as Harmony Square economic ventures. In Ontario, the number of businesses reporting a positive impact from education-related institutions was 47 percent, triple the number from 2011. The increasing demand and resulting infrastructural solutions in cities like Waterloo provide examples to other college towns (such as Kingston) who are looking to capitalize on the short-term demands of students looking for consistent and similar properties.
Shifting university residence culture
If the university student has existed for decades, why target them so heavily now? Because culture is shifting: the millennial generation is demanding and expecting an increasingly large amount of amenities and additions to the household. Granite countertops, stainless steel appliances, bi-weekly cleaning services, hardwood floors, free wireless connection, and laundry facilities are a select few examples. The whole package and more is slowly turning from desires to necessities. The older type of dorm housing no longer meets the heightened expectations of the millennial university student.
In 2003, Varsity Properties was inaugurated with the premise of serving exclusively students. Some agencies may view property management a burden when dealing with youth who do not know how to change a light bulb; however, in comparison to the yield received from easily maintainable apartments, off-campus homes are valuable the long run. Varsity Properties even goes to the great lengths of sending you weekly reminder e-mails for garbage and recycling collections. Highly unique services such as these are key differentiators that students truly care about. In short: they have replaced Mom.
The pressures for obtaining a convenient and comfortable home is still very evident as real estate in Kingston, and many other Canadian college towns, is slowly being exploited to the market imbalance of the newly emerging student housing business.
Signing a property lease with fellow friends in a foreign city is a quite romanticized concept. A rush of feelings from angst and reluctance, along with a hint of curiosity all boil together. While peering over at the dozen other potential tenants, doubt is immediately overshadowed by panic. Though unnoticeable to us at the time due to our naivety, my housemates and I had fallen privy to the grasp of landlords who managed to understand the ambiguous market all too well. All because: they had created it. Through intimidation with formality, our childish instincts concluded with a week long legal battle. We were saved from the wrath of courtrooms to the comfort of the classrooms.