Villas on 26th has remained fully occupied since opening and is 90% pre-leased for the coming year.
AUSTIN, TX—Investment in student housing has consistently offered long-term stability, attractive risk-adjusted returns and safe diversification with respect to other asset classes, according to a report by ARA. This is especially evident in Austin.
On the heels of the Skyloft sale, another property near the University of Texas at Austin campus recently sold. Villas on 26th recently sold for an undisclosed price to Arrimus Capital free and clear of debt.
Villas on 26th has remained 100% occupied since opening and is 90% pre-leased for the 2019-2020 academic year.
Its location at 800 W. 26th St. is less than half of a mile from the campus. Completed in 2014, the luxury property is located at the epicenter of UT Austin's West Campus student housing market, which positions it within walking distance to more than 50 retail, dining and entertainment destinations.
HFF worked on behalf of the seller, Zucker Properties. The HFF investment advisory team was led by director Ryan McBride and senior managing director Doug Opalka.
“Austin, and specifically West Campus, continues to be one of the hottest student housing markets in the country seeing tremendous occupancy and year-over-year rent growth,” McBride tells GlobeSt.com. “Even in the face of new supply, we expect Austin to remain a core market for student housing investment.”
The property consists of 182 beds across 49 units averaging 1,591 square feet, 97% of which are larger three- to six-bedroom floor plans. Units are equipped with technology such as Savant smart home automation systems, 60-inch high definition TVs, Apple TVs, Polk surround sound speakers and in-wall iPad touch screens. The property's larger units also include private in-home movie theaters with 110-inch projection screens.
To complement the property's technology, units feature condo-quality finishes, including custom stone countertops, stainless steel appliances. designer lighting, hardwood-style flooring, walk-in closets and in-unit washers and dryers. Common area amenities include a swimming pool-sized hot tub on the mezzanine level, multiple outdoor patios with televisions, 24-hour fitness center and multi-level underground parking.
The student housing buyer profile has diversified in an increasingly competitive landscape. Maintaining the trend from recent years is the private sector, leading the market by accounting for 41% of acquisitions with more than $1.5 billion purchased as of mid-year 2018, according to ARA. As expected, the institutional sector has been steady and strategic in its approach with more than $1.1 billion in acquisitions in 2018.
This number is significant as it represents nearly $250 million more than all of 2017, combined, proving out the amount of capital readily available and the appetite for student housing, particularly after institutions decreased acquisition activity from 2016 to 2017. Foreign capital changed the landscape of the student space in 2017 with more than $2.8 billion of investment-grade student housing acquisitions, accounting for 36% market share. The influx of foreign capital was formidable in 2018 as well, accounting for 22% of all transactions at mid-year.
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Lisa Brown
Lisa Brown is an editor for the south and west regions of GlobeSt.com. She has 25-plus years of real estate experience, with a regional PR role at Grubb & Ellis and a national communications position at MMI. Brown also spent 10 years as executive director at NAIOP San Francisco Bay Area chapter, where she led the organization to achieving its first national award honors and recognition on Capitol Hill. She has written extensively on commercial real estate topics and edited numerous pieces on the subject.
