Common room in l'Ardoise, a 205-apartment building in Québec City that opened in 2023. All UTILE buildings have one common room where students can go to study or socialize.Utile
About a year ago, UTILE, a Montreal-based non-profit that develops and operates student rental housing, began leasing up its most recent project – a 205-bed apartment dubbed l’Ardoise (The Slate), just a few minutes’ walk from Quebec City’s Laval University campus.
It was an otherwise ordinary event, but for the fact that the seven-storey building was completed in just two years. “A speedy delivery,” muses UTILE CEO Laurent Levesque, explaining that UTILE was able to seize an opportunity to acquire a fully permitted development site from a condo builder that had changed its mind. “We were able to get to concrete very, very quickly.”
Founded about a decade ago as a student housing service, UTILE has emerged as a major player in the so-called “purpose-built student accommodation” (PBSA) market, having completed four projects with 600 units in the past four years. It has another 1,500 units in the pipeline, and the next one breaks ground later this fall, Mr. Levesque says. The entire portfolio is now valued at more than $500-million.
A group of idealistic graduate students established UTILE in 2012, and the non-profit made its first big breakthrough a few years later by persuading the Concordia University students’ association to commit $1.8 -million in equity to its first development project, an 80-unit building in Montreal. The cash, equivalent to about 10 per cent of the total cost, was sufficient to kick-start the kind of initiative not normally associated with student associations.
Today, Mr. Levesque says, UTILE has plenty of momentum, but the appetite for its non-profit units – which typically rent for about 10 to 30 per cent below market rents – far exceeds the organization’s portfolio. “The demand for this category and this price point is so massive,” he admits. “We shut down applications after we’ve had 10 applicants for every available unit.” The situation, Mr. Levesque adds, is “terrible.” “It’s one of the reasons we’ve accelerated our growth.”
UTILE's latest project, named La Canopée, in Trois-Rivières. It contains 179 apartments and its first tenants moved in in June this year. Studios are rented at $629 per month, services included (electricity, hot water, heating, internet, fridge and oven).Utile
Canada’s student housing market represents one of the dodgiest aspects of the national housing affordability crisis. In many big cities, postsecondary students tend to find housing in student ghettos and overcrowded condos or poorly maintained rooming houses, paying exploitative rents for bedrooms that turn over at the end of every academic year. The influx of international students in recent years made a tight market that much more precarious.
“Students themselves can often live in very dangerous, precarious housing situations because they get taken advantage of,” says Mark Richardson, technical lead for Housing Now, a housing advocacy group in Toronto. “We have students living in their vehicles in Canada, depending on where you are. We certainly have students who are being put into basements. You often find that a three-bedroom apartment might have five or six students living in it.”
While there’s nothing new about rundown student housing – just ask any Queen’s University graduate – the ratcheting up of rents in the past few years has not only shone a spotlight on this grim corner of the market but also drawn attention to Canada’s curiously limited PBSA sector.
“We’re quite underdeveloped,” says Ryan Tran, vice-president of CBRE Canada’s alternative assets group. He says there are currently enough purpose-built beds – about 155,000 in all – to house about 10 per cent of postsecondary students in Canada. That ratio is “very, very low compared to other countries,” Mr. Tran adds. “In the U.K., you have that number upwards of 60 per cent. It shows how far behind we are.”
In fact, according to CBRE’s research, student housing is a fast-growing asset class in many countries, thanks to nearly 100-per-cent occupancy rates, high rental rates and the mandatory bundling of meal plans. The industry has also attracted unwelcome criticism in recent years for both its aggressive pricing strategies and some notoriously bunkerlike projects filled with windowless bedrooms.
In Canada in recent years, some builders and REITs have stepped into the breach, either by acquiring and transforming hotels or developing their own projects, such as the four-phase, 910-unit Quad complex at York University, the first two of which are now open. Forum Asset Management, a Toronto investor and asset manager founded in 1996 by real estate veteran Richard Abboud, developed all four projects in 2021 and 2022 as part of its growing portfolio of PBSAs.
The business models vary significantly, and include various forms of public-private partnerships. Some are built on university or college campus lands (e.g., University of Guelph) while others are situated off-site but nearby. Most offer amenities – gyms, meal plans, retail – and tend to rent suites, with four or five bedrooms sharing common areas, like kitchens.
UTILE, says Mr. Levesque, has taken a somewhat different approach, eschewing services in order to keep its rents low, and also in recognition of the fact that tuition fees typically include access to high-quality sports facilities.
The trick with PBSA projects is finding developable land near campuses. Broker Derek Lobo, CEO of SVN Rock Advisors, which represents student housing providers, says location is the “No. 1 factor” in determining viability.
Transit access, walkability and safety are key considerations. Yet every developer is looking for those qualities, so in large markets, real estate costs can be onerous. “In all our projects so far, we’ve bought the land from private owners,” says Mr. Levesque. “But land is expensive and it’s even more challenging to find free land in big markets.”
While the handful of developers building PBSAs in Canada seem bullish about the future for this asset class, the sector’s growth isn’t as watertight as the high-level trends might indicate. In 2022, Toronto Metropolitan University, for instance, cancelled a 600-bed residence project – a move that Mr. Richardson describes as “a public policy failure.” (TMU will still build classrooms, offices and research facilities on the site – a parking lot at Jarvis and Yonge streets – but the plans for the residence component were iced.)
The University of Toronto, meanwhile, has had a big housing/office project – known as The Gateway, to be situated at Bloor Street and Spadina Avenue and developed by Westbank Corp. – on its books for years, with no evidence of movement to date. “It’s still in the works,” says Mr. Tran.
It remains to be seen how the federal government’s move to limit international students will impact investment in this sector, although the Liberals have tweaked Ottawa’s big housing investment fund to allow funds to flow into student housing. Meanwhile, the Ontario government, in one of its latest set of land use planning reforms, has exempted postsecondary institutions from the development application process – a move that could also accelerate the construction of new residences.
But for UTILE’s Mr. Levesque, the point is not to create attractive new investment vehicles for asset managers but rather to add some sanity and quality of life to the student housing world by adding non-profit models to the mix. He says that while UTILE hasn’t yet ventured beyond Quebec’s borders, the group has fielded inquiries from across the country.
“What we see when we look at students, and the data on students’ housing situation, is that they are on the front lines of the housing crisis,” says Mr. Levesque. “If we want to secure Canada’s ability to educate its population and house postsecondary students for future generations, we need to have a sufficient stock of different asset classes and different types of offerings for students. But we also need to have at least a portion of that housing stock that’s affordable and remains affordable.”
Major players in the PBSA sector
While hundreds of small players operate in the private student housing market, including those who lease out carved-up and permanently rented houses in student ghettos, there are only a handful of large firms, most of whom have been in this market for under a decade. Some build PBSAs from scratch while others acquire and convert hotels or other multi-unit sites.
The Marq (Toronto): Thirteen properties in London, Ont., Waterloo, Ont., Calgary and Montreal, with furnished rooms, shared amenities. Operator for Centurion Asset Management, which is a diversified real estate and financing REIT.
Campus Suites (Toronto):The company claims to operate 17,000 units of student housing across North America, including properties owned by Forum. Campus Suites also provides development consulting services, commercial and retail leasing and property management.
Forum (Toronto): Seven PBSA projects, including the sprawling four-phase Quad residences at York University, comprising almost 2,500 beds. Forum builds and buys other multiunit rentals but the PBSAs account for about two-thirds of the value of the firm’s $630-million portfolio.
UTILE (Montreal): Thirteen properties developed and operated on a non-profit model, almost 2,100 beds; rentals only to students, but no amenities, services, et cetera.
Knightstone Capital Management (Toronto): Six properties in Ontario with more than 5,100 beds, operated either by universities or outsourced to subsidiary Canadian Campus Communities. Some with dining hall service or ground floor retail.
Alignvest (Toronto): Seventeen properties with more than 6,600 beds in Ontario, Quebec and Alberta, mainly off-campus but typically within a 10- to 15-minute walk and affiliated with specific postsecondary institutions; on-site amenities, parking, suites with up to five bedrooms. Alignvest’s student housing REIT last November acquired, with a financing partner, the historic Stewart Building, on College Street west of University, and has plans to redevelop the site with student housing.
Campus Developments (Toronto): Two projects serving Carleton University, with a total of 827 units and 1,410 beds (phase one completed in 2021, phase two, 2026); fully furnished, on-site amenity and commercial spaces.
Editor’s note: A previous version of this article incorrectly stated that Forum REIFF acquired the Quad complex at York University. It was developed by Forum Asset Management with Campus Suites and retains ownership through Forum REIIF. This version has been updated.