Students and investors are demanding greener accommodation.
Environmental, social, and governance (ESG) issues have solidified their position of importance in the student accommodation sector as students and investors are demanding higher standards.
This demand is pushing PBSA providers to prioritise ESG considerations in their developments.
Fresh, a leading provider managing properties with over 22,000 beds across the UK and Ireland, exemplify this new shift towards ESG developments.
Craig Bryant, strategy and business development director at Fresh, says its new environmental measures include sourcing renewable electricity, enhancing biodiversity in green spaces, promoting cycling and greener public transport, and retrofitting energy management systems in buildings to reduce energy wastage.
He adds: “We are installing water-saving technologies in flats but ensuring that performance and experience of showers and taps is not compromised for residents.”
As one of the student sector’s big operators, Bryant acknowledges that Fresh finds itself in an influential position and accepts it has a responsibility to tackle the issue.
He explains: “We have got our own corporate ESG targets to achieve, but it’s really on the ground at the sites we manage that we can help to influence residents’ behaviour.”
Investors are increasingly looking for operators and developers who address ESG concerns.
Jamie Harris, head of student accommodation at Harris Associates, says investors are increasingly seeking operators and developers who prioritise ESG considerations.
He explains that ESG requirements will become standard for all new properties entering the market:
“Everything coming new on to the market will have that ESG threshold built into it. If it costs more to build that into it, then that will be passed down to students who will have to pay more in rents. Older stock or less-performing stock could fall out of the supply chain.”
Unite Students have recently announced their goal to achieve net zero carbon for existing buildings and developments by 2030.
Michael Burt, the investment and sustainability director at Unite Students, shares the ambitious goal of achieving net zero carbon for the company's existing buildings and developments – roughly 70,000 student beds across 23 UK cities.
Burt explains: “For our existing buildings, that means we need to reduce their energy intensity by about 30% by 2030.
“That requires putting in place things like LED lighting and heating controls, improving the fabric of buildings and using onsite solar and air-source heat pumps.”
Similarly, Unite has switched from using full bricks to brick slips, resulting in significant carbon savings. They are also exploring low-carbon alternatives to concrete and steel and designing buildings with less energy-intensive materials.
Developers and operators need to invest in their buildings and initiatives to meet ESG standards, which may not be easily recouped through higher rents.
Rachel Ward, senior associate at property agency Gerald Eve, points out that investment is not easily recouped. She says that while students might want to live in sustainable buildings, it is not something they are necessarily willing or able to pay extra rent for.
“Similarly, there is a lack of transactional evidence to demonstrate an increase in property values as a result of sustainability features,” she adds. “However, the presence of such features will make the property more attractive to student operators, both in terms of appealing to students, but also in terms of energy efficiency measures reducing operational costs, which would have a positive impact on value.”
Bryant agrees, adding that parents, who often have a significant influence on accommodation decisions, prioritise factors such as location, safety, and security over environmental sustainability.
However, Harris says student operators don’t have much of an option. The investment community increasingly values ESG credentials, making it necessary for student accommodation providers to align with ESG standards.
If you are interested in promoting your properties to students, accommodationforstudents.com offers a variety of options.
