Fusion’s curriculum for rethinking student digs

The summer holiday may be under way for its tenants, but the directors at purpose-built student accommodation developer and operator Fusion Group are still studying hard as the company works on a growing portfolio of sites. Since its launch 10 years ago, Fusion has delivered just over 5,000 beds across 10 university cities. But its directors say this is just the beginning – Fusion has filled a pipeline with 9,000 beds either in construction and planning or contracted, with a further 1,500 going through the legal process. The scale of the portfolio stands somewhat at odds with the size of the company, its bosses acknowledge. But the modest size of the team is what lets it move with speed. “We are the largest privately owned student accommodation developer [in the UK], and we’re also quite a small and agile team,” says commercial director Laura Kurt. “It has allowed us to make innovative and nimble decisions. Our ethos is all around wellbeing and creating experiences that enhance the lives of students whilst they’re living with us. It’s about the kind of environment that they’re in.” Fusion built a reputation signing large-ticket deals with institutional capital, notably in 2021 when it sold a £315m portfolio of four assets in Cardiff, Hatfield, Swansea and Sheffield to Lone Star. The following year Fusion signed a £1.5bn joint venture with Cain International, since ended, but schemes from which are in Nottingham, Liverpool and Manchester.  [caption id="attachment_1248222" align="aligncenter" width="847"] Fusion Group’s Wood Green[/caption] Now the maturing business is looking at a shift in its strategy, acquisition director Ben Henry says. “After Fusion’s launch, as it was a slightly younger business, we had to build and sell to allow us to go and rebuild the pipeline. However, now with the success we’ve had and with the pipeline we have, what we are looking for is an element of retention in our buildings moving forward, to keep the Fusion brand, because we believe that that is super valuable.” Premium product Fusion is focused on carving out an identity for itself in the eyes of students and partners alike, by having its buildings and ethos brought to the forefront. “The branding allows us to maintain the element of control over our ability to ensure that we’re operated, managed and visually look like a Fusion building,” says Henry. “That’s important to us because it aids in building relationships with potential funding partners and proving to local authorities that we’re working with on future sites that what you see is what you get. Every site we’ve ever bought, we’ve achieved planning. We have never traded a building on once we’ve got planning – our ethos is to achieve planning and build it out.” Kurt adds that the Fusion brand has resonated with students. “We were the only ones that were brand-focused 10 years ago, and that’s only strengthened,” she says. “We do understand that there’s a value in having a brand for students from a service and consistency point of view.”   I think we’re considered premium because of the volume of amenity space that we prioritise. Fundamentally that comes back to our ethos around wellbeing, and the environments that we’re creating. So, it’s premium because you get a lot of value for money from it The Fusion team sees its offering as a “premium product”. “We don’t necessarily design for a premium and we just put a lot of consideration into the spaces. I think we’re considered premium because of the volume of amenity space that we prioritise,” Kurt says. “Fundamentally that comes back to our ethos around wellbeing, and the environments that we’re creating. So, it’s premium because you get a lot of value for money from it.” PBSA versus HMO The Fusion duo say that universities have been “far more open to speaking with PBSA developers” in recent years. They believe this is because the sector has proven its worth, and universities know that it is “better for the students to be in a PBSA than an HMO”. However, the sector faces challenges, foremost among them the lack of supply and increasing demand, which in turn is leading to increased rents and unaffordability. However, Kurt says: “If enough developers can move forward and actually deliver on their acquisition strategy, it will benefit the sector overall. Everybody needs to push forward, build more, help with that supply-demand issue that so many cities are having at the moment. “That, in turn, will respond to a lot of the issues around availability as well, from a student perspective, and also then allow the market to start innovating in different areas. I think at the moment we’re so held back by challenges around construction through to planning.” [caption id="attachment_1248225" align="aligncenter" width="847"] Fusion Nottingham’s event space[/caption] In terms of what the new Labour government can do to aid the student sector, Henry says: “A focus on student is important, and recognising the economic value that they present, and the kind of longevity of the institutions is obviously very important for the sector overall. And some policy will be at play there. Any kind of positivity that can come out of that would be good, but we’re not expecting anything to change in the short term because it’s not been changing for so long.” Partnership as the bedrock Fusion’s joint venture with Tri7, a real estate investment and asset management company, has kept the team busy in recent months. The duo identify income-producing assets located on “prime PBSA-potential” sites and acquire them on an unconditional basis. The sites have leases in which vacant possession is too far away for Fusion to buy alone, but too near for an investor to buy as an investment. Fusion targets sites with potential for more than 300 beds in Russell Group university cities, as well as other major UK cities that “have a well-regarded university”. “We look at anything really that is well-located for PBSA use, with our Fusion hat on,” Henry says. “That can be industrial, it can be a shopping centre, it can be a bingo hall, it can be an office. And it can be consented sites, which aren’t necessarily consented for student use, but we think it’s a good student location. We’re very inquisitive and on the hunt for acquisitions. We are very focused on finding sites. However, we are very specific as to where we buy. And within the cities that we are, we are very specific in the micro locations that we’re looking at.” Among their ongoing schemes, Fusion and Tri7 will redevelop the Core Shopping Centre in Leeds. The site, previously known as the Headrow Shopping Centre, is located on the site of the former Schofields department store. The pair plan to demolish the premises and develop three buildings of nine storeys, which will provide 36,000 sq ft of retail space and an 807-bed PBSA scheme.  They have also secured planning permission from Charnwood Borough Council for a 541-bed purpose-built student accommodation scheme in Loughborough, Leicestershire. The nine-storey building will be built on a derelict brownfield site at Limehurst Avenue, adjacent to the Grand Union Canal Basin and will be delivered in time for the 2027/28 academic year.  [caption id="attachment_1248223" align="aligncenter" width="847"] Private dining space[/caption] Tri7 and Fusion will also redevelop a site let to Mecca Bingo in Wood Green, north London. The 2.16-acre site is let to the occupier until December 2026 and includes an adjoining car park on Lordship Lane. Its redevelopment will comprise four buildings of up to nine storeys containing 623 student bedrooms with associated amenity spaces, such as private and social study areas, a library, a gym, karaoke rooms and a podcast and recording studio. The development will also provide 77 affordable homes, comprising 25 shared ownership apartments, 45 social rent apartments and seven social rent five-bedroom townhouses.  Mixed-use infusion Kurt says the Wood Green site is a game changer for the developer. “Our Wood Green scheme is a mixed development,” she says. “We are capable of delivering beyond just student. Sometimes those locations could benefit from having both student and co-living, affordable, whatever that looks like and whatever the need is for that location. We’re capable of delivering that, so it allows us a lot more flexibility and openness in the conversations that we have.” For the next stage of Fusion’s growth the developer will target the co-living sector, which Henry describes as “the next obvious step for us as a business”. “It’s a sector we believe we can transition to,” he adds. “We produce a very mature product that is highly amenitised. And we have very strong knowledge in terms of planning that and working with planning authorities. So we are waiting for the right time – the week before we think is the right time – to enter that sector.” Images © Amber Pollack / Fusion Group