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Investors, Renters Will Still Flock to Student Housing

NEW ORLEANS—Despite the naysayers, student housing remains a viable alternative investment class within multifamily. So says Peter Katz of Marcus & Millichap''s Institutional Property Advisors.

By Sule Aygoren | Updated on October 21, 2013

NEW ORLEANS—Despite the naysayers, student housing remains a viable alternative investment class within multifamily. So says Peter Katz of Marcus & Millichap”s Institutional Property Advisors. GlobeSt.com caught up with the executive director at the National Multi Housing Council’s 11th Annual Student Housing Conference & Exposition, held here Sept 30 – Oct 2. Here’s some of what he discussed.

  • While there have been certain markets that have seen high degree of core class A deliveries in recent years, the enrollment growth at many state universities coupled with the socioeconomic resident profile having the wherewithal to pay strong levels of rent in dense sites has been very successful at major tier I universities.
  • Because student housing has become a more accepted multifamily niche from an institutional equity perspective, there’s readily available acquisition financing from Freddie Mac, Fannie Mae and now CMBS.
  • Since student housing trades at yield-adjusted cap rates and is still able to get the same exact debt as market-rate multifamily, it’s a very viable industry. More importantly, it’s providing higher cash-on-cash returns and levered yields than market-rate product.
  • Student housing is recession resilient because it will see demand both from renters by choice and renters by need.
  • There are more value add investors coming into the sector, particularly for product targeting necessity renters.

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