Student residences at the University of Toronto, on Aug. 19, 2003. Purpose-built student housing is cheaper to construct than regular housing.Patti Gower/The Globe and Mail
Richard Abboud is the founder and chief executive officer of Forum Asset Management, a provider of purpose-built student housing.
While Canada faces a shortage of all types of housing, I would argue it’s the lack of accommodations for university students that hurts the most.
For starters, it’s an emotionally significant type of housing. A secure roof over one’s head smooths the transition to adulthood at a trying and vulnerable time of a student’s life. For parents, housing is one of the biggest issues they face when sending their child off to school.
But the implications of not addressing the student-housing problem go well beyond the emotional significance. A shortage of student housing puts further pressure on the heated housing market and jeopardizes one of Canada’s few remaining competitive advantages: our highly educated work force.
This seems like an obvious market for real estate companies to cater to, yet the purpose-built student housing sector in Canada is massively underdeveloped. The data show that when we compare the total number of postsecondary students to the total purpose-built student housing supply, there is a significant shortage of beds. In Canada, that number, also referred to as the provision rate, sits around 10 per cent. That is well below the levels of the United States and Britain, which are closer to 30 per cent.
In terms of the broader market, CMHC estimates Canada will need 3.5 million more housing units by 2030 to meet demand. The $2-trillion in capital needed to reach that goal is a staggering amount and simply isn’t available today in Canada.
Housing designed specifically for students’ needs is critical. When it’s not available, it pushes students away from university campuses and into surrounding communities, forcing them to compete with and potentially displace families and individuals looking for a reasonably priced place to live. With more than two million postsecondary students in Canada, the shortage of student housing is a massive strain on Canada’s overburdened housing market.
Moreover, if we don’t figure out a way to fix it, we risk Canada’s competitiveness falling further behind.
The University of Prince Edward Island suggested in 2022 that students who had not yet secured accommodations by a certain date should consider deferring their studies.
No doubt, such deferments are happening all over the country, even if universities aren’t making the suggestion explicitly, as would-be students reconsider their choices when they can’t find housing. That has a direct impact on the work force universities produce, which in turn has an impact on our economy.
Before you go blaming this on international students, let me be clear: The inflow of international students to Canada’s best universities is not a problem. In fact, we need those students. We don’t need fewer skilled workers, we need more.
Rather, the problem is that we haven’t built out our housing capacity to accommodate this critically important part of our country’s emerging work force. For decades, most investors have sat back and hoped universities and colleges would sort out housing needs for students. Our performance as a country has fallen short.
It’s not too late nor too difficult to fix this mess. Purpose-built student housing is cheaper to construct than regular housing. In congregate-living environments, there are fewer kitchens and bathrooms, and rents remain reasonable. Costs can be further reduced when the business model is scaled up for efficiency, and there are savings to be realized if local governments make getting approvals in place faster and expediting construction a priority.
So let’s get to work. Whether it’s in large cities or in the many university towns, the private sector is needed to produce more rental housing designed for students. This is not a challenge for government and government alone; investors must step up. As organized pools of capital grow, so too will the housing stock for students and other Canadians.