Student housing thrives where scores of students need a place to crash while attending classes—live, in-person, on-campus classes. What should be a solid play for commercial real estate appears headed for hard times.
DBRS Morningstar identifies student housing as "the next falling domino" in the commercial real estate industry. "We foresee student housing properties being inadvertently affected in the near to medium term by the move to online-only classes," the credit ratings business wrote in a new report.
To draw that conclusion, DBRS Morningstar took into account preleasing, the option for students to take a gap year and poll results from College Reaction showing "only 65% of students would return to campus if colleges were to physically reopen for the Fall 2020 semester without a coronavirus vaccine or cure." Major student housing owner American Campus Communities said recently that preleasing for the upcoming fall semester was down 40% from its normal leasing velocity, according to the DBRS Morningstar report.
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Thomas Phillips
Thomas Phillips is part of the social media team at ALM Media.
