Once viewed as an “outsider” in the multifamily business, student housing has moved to the head of the class, as institutional investors and developers—wary of the anemic conditions plaguing other commercial real estate sectors—are looking to enter the recession-resilient market.
Over the years, student housing has evolved from an unsophisticated business with many off-campus, mom-and-pop operators to one that’s gaining institutional acceptance. Ever-increasing rents and record college enrollments are driving demand.
“Student housing has become a fast-growing asset class as institutional investors have become far more comfortable with the sector’s dynamics,” says Dorothy Jackman, a Clearwater, FL-based managing director of Colliers International’s new National Student Housing Group. “The cottage industry of 15 years ago has given way to a far more institutionalized property type.” She points out that two of the best-performing REITs in the country last year were student housing companies.
“While public REITs have set the stage for the institutionalization of student housing, there’s considerable private capital also very active in the sector,” Jackman adds. “It’s a very vibrant sector that’s becoming more aggressive and competitive as partnering on the private side continues to increase.”
Institutional investors have taken notice and are chasing deals at aggressive rates and terms. They’re seeking high-quality assets and markets with high barriers to entry. Major capital wants first-class, core assets located close to major universities. With mounting competition, smaller players may be pushed out to tertiary properties...
…For the rest of the story, visit the February/March 2012 issue of Real Estate Forum.
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