The best part of college is the college campus. I don't know why companies don't want to try to replicate that. It would definitely be more appealing to younger employees, and I be it would get them to stick around much longer.
Imagine being able to walk to work, and having most of your coworkers live close by as well. The social bonds you would form with people would be much stronger. And moving to that campus to start at the company would be less scary knowing that you'd quickly get to know and build good relationships with coworkers/neighbors.
Yeah, it would mean earning more money might not actually get you a nicer living arrangement, since you might not have many choices and pretty much everything would be provided for you. I guess you'd want to try to figure out the correct mixture (maybe 40% on campus 60% off).