CAPRE’s Canada Student Housing Forum Preview: Q&A with AJ Keilty, Varsity Properties
by Josh Anderson
TORONTO, ON — A.J. Keilty founded Varsity Properties in Kingston, Ontario when he was 24 years old. From humble beginnings in 2003 to now, Varsity has been on a mission to simplify the housing experience for students and their parents by combining the highest quality locations, features and finishes with premium hotel level guest services. A.J. knows a thing or two about hospitality and what it takes to deliver positive guest experiences. He grew up in the hotel business, for more than two decades his parents were owners and operators of one of Ontario’s Finest Inns, The Gananoque Inn & Spa. It was through this upbringing that he learned how it’s the small gestures of service that make the big difference in a guest’s stay. Keilty will be a featured speaker at CAPRE’s upcoming Canada Student Housing Forum. We recently connected with him to learn about the latest drivers and opportunities in the Canadian student housing arena.
CAPRE: Thanks for chatting with us today, A.J. How have you been kicking off 2019?
Keilty: We’ve been busy closing condo sales in Oshawa, Ontario. In September we delivered a new 309 bed project beside the University of Ontario in Oshawa, we spent the last two years building and now nearly all the condo deals are closed. That’s been a big chunk of our effort thus far this year. We’ve also been constructing a pre-sold condo project just a few meters down the street – a townhouse development called University Towns. Construction is on schedule and looking good. Our team is also busy leasing and pre-leasing both of those projects for 2019. So, there’s been a lot of action for our team in Oshawa recently.
CAPRE: What trend lines or demand drivers are setting the pace in the student housing arena?
Keilty: It’s clear that many Ontario Universities will be seeking to increase their international student enrollment in an effort to make up for recently announced provincial funding cuts. We like Kingston because Queen’s as a lot of capacity to increase international student enrollment as its current international enrollment is far below the provincial average.
Also, we continue to see the best demand in towns where there is a high proportion of destination student’s vs commuter students. 95% of students that attend Queen’s are destination-students, meaning that they are not local, and therefore need to rent a place to live. Queen’s has the highest percentage of destination-students in Canada.
Finally, across most of the province there continues to be an under-supply of rental housing. We believe that developers that focus on the most under serviced markets will find success. Kingston suffers from the lowest vacancy rate in the province, with a vacancy of 0.6%. There just hasn’t been enough housing built to keep up with demand. We’ve spent 8 years now acquiring and rezoning land there. We are excited to be bringing some much-needed housing supply to that city’s downtown core.
CAPRE: What are you looking forward to about CAPRE’s Canada Student Housing Forum?
Keilty: We’re looking forward to the opportunity to get people in the same room who are involved in our very small niche industry – Canadian student rental housing. There aren’t a lot of people in the country who are focused on this segment of the real estate market. It’s always great to share best practices to avoid mistakes. I’m very excited to share and learn from my peers – it’s not something we get to do very often.
CAPRE: What topic or themes will be the center of conversation?
Keilty: There’s continues to be a desire to understand the increased yield that can be derived from student housing vs multi-family housing. There’s concern about operational expertise required to run what is essentially an extended stay hotel – the hospitality focus required to keep this demographic and their parents happy is intense. It’s important to talk about how a programmatic lifestyle found in student housing is different very from the multifamily business. The industry is maturing in Canada it’s still early days. There’s lots of opportunity to grow in our industry.
CAPRE: What in your opinion is the most exciting opportunity facing the Canada Student Housing Arena?
Keilty: A growing university or funding growth is always an exciting opportunity. Government funding is going to be lean, so only the mature schools are going to be growing their asset base such as residences with the help of alumni support and public-private partnerships. It may be a long road to get from a potential project to those great things. And when capital is constrained, it creates a space for third parties to fill the gap. International student growth is a major goal for every institution in the country. To keep the lights on, these places have to grow. And these new students need places to live. We can help with that.
CAPRE: Indeed. Thanks for chatting with us A.J.. We’ll see you in Toronto!