Rental Housing Hierarchy: Why Student Housing & Seniors Housing Aren’t the Same

On December 10th the Toronto Star published an article which described how a group of Mississauga residents are opposed to a developer’s proposal to build a “seniors apartment and assisted-living” complex near their homes on the site of a convent owned by the Carmelite Sisters of Canada, who also operated a senior’s home which was closed in 2015. You can read the full article via the link below, although you’ll need a subscription to the Toronto Star since it’s behind a paywall.

The article quotes Harry Henderson, the chair of the local neighbourhood residents association, who is concerned about the propose scale of the redevelopment project and the amount of traffic and noise it could bring to the neighbourhood, plus the potential for some units to end up occupied by students rather than seniors (the site is close to the UofT’s Mississauga campus).

That last bit about the new complex being occupied by students instead of seniors caught my attention because based on my experience in the rental housing industry this is highly unlikely. I want to explain why by looking at what I call the rental housing ‘hierarchy’.

The rental housing hierarchy looks something like this:

At the top of the hierarchy is seniors housing, which, in most markets, achieves the highest monthly rents and the highest rents on a per-square-foot basis. This is because units typically have a small SF, often smaller than non-seniors rental units, and because seniors housing, by offering a wide range of services including medical monitoring and meals, is able to ask and get very high rents, usually several thousand dollars per month.

Furnished suites rank next. These are apartments which are being leased on a weekly or monthly basis to executives and workers and are typically managed more like hotel rooms than conventional rental apartments—extra services such as cleaning and linens are often provided, plus furnishings of course. Due to the short term nature of these rentals, high rents are usually achieved, much higher than unfurnished conventional rentals.

Student housing ranks next, which, for the purposes of this hierarchy, means privately operated, purpose-built rental housing for students (usually apartments, although some student townhouse properties exist). Purpose-built student housing is rented to student renters by the month, but, for units with multiple bedrooms, landlords usually lease each bedroom independently. This means that landlords can achieve high rents for, say, a 4 bed unit, by renting out each bedroom, much more than they would achieve by renting the entire unit to a family. Student-oriented amenities are usually offered and overall quality is designed to take a beating, although this does not necessarily mean compromising on ‘luxury’.

New and recently constructed purpose-built rentals rank next and usually achieve higher rents than condominiums available for rent, not because of higher quality or more amenities but because management companies which operate purpose-built rentals have a significant advantage over individual condo owners when it comes to marketing, leasing, customer service, and property management. The difference in terms of physical characteristics is usually minimal and these days new rental buildings aimed at the top of the rental market are often indistinguishable from condominium buildings.

At the bottom of the hierarchy are older purpose-built rentals, whether renovated or still in original condition. These are the least appealing to renters and usually have the most basic amenities packages and unit features so they achieve the lowest rents (relatively speaking) compared to the rest of the hierarchy.

Okay, so why did I say earlier that it’s unlikely that seniors housing units proposed for Mississauga site would end up occupied by students? There are several reasons.

  • Seniors housing has smaller sized units than student housing: Seniors units are generally smaller in square footage than the same units would be in the conventional rental market, while student housing is usually even smaller than seniors units.
  • Seniors housing has different unit types: Seniors prefer to rent 1 bed and 2 bed units, depending on whether they are single or a couple, while student housing is usually configured for multi-bedroom units such as 3 bed and 4 bed units and even 5 bed units.
  • Seniors housing has different amenities than student housing: Seniors require different amenities than students.
  • Seniors housing has different pricing structures than student housing: Seniors housing pricing is based around offering a variety of extra services such as meal services, cleaning services, social activities, medical monitoring, and nursing which student housing does not provide.
  • Seniors housing has different lease lengths than student housing: Seniors rent via 12 month leases or other long-term arrangements while students prefer to rent for 8 months only (from September to April).
  • Seniors housing has different turnover rates than student housing: Seniors stay put for years while 100% of students come and go each year.
  • Seniors housing has different longevity (wear & tear) than student housing: Students are a lot harder on rental housing than seniors.

Purpose-built seniors housing is designed, configured, and managed much differently than purpose-built student housing and the two types of housing are not compatible and the two types of target renters are not interchangeable. In short, a developer who goes to the great expense and trouble to construct a purpose-built seniors housing complex, with all the specialized configuration it requires, is not going to rent it to students, who need completely different housing and as my rental hierarchy has shown pay lower rents on a monthly basis and usually on rent-per-square-foot basis too.

As for the neighbourhood residents association’s other concerns, which were increased traffic and noise, it should be self-evident that seniors simply do not drive as much as other people and do not make as much noise. I have a close friend who lives near a seniors centre and the only traffic and noise problems are ambulances. We should all have neighbours so benign!