Will the student housing boom last?

The industry is facing demographic and economic pressures

TRD NATIONAL /
Aug.August 15, 2018 08:00 AM

Clockwise from top left: The London in College Station, Texas, The Crimson in Tuscaloosa, Alabama, The Ivy in Tampa, Florida, and The Harrison in Harrisonburg, Virginia (Credit: CLS Living)

As more investors have funded housing near universities, overbuilding has been a danger for some property owners. Investors are being more cautious as some backers have seen their bonds downgraded.

Real estate fund managers raised $1.9 billion, through July, for student housing projects globally, the same amount as they raised in all of 2017, according to a report in Bloomberg.

Portfolios are trading at high prices, too. As a part of Greystar Real Estate’s $3.2 billion purchase of Education Realty Trust in June, the company formed a joint venture with the Blackstone Group to buy some off-campus locations for another $1.2 billion.

At the same time, existing portfolios are commanding steep prices. The influx of money has divided the market in two: areas where supply is tight and others where it’s excessive.

Student housing also faces unique pressures. For example, there’s much more turnover among tenants, so landlords have to constantly fill units. Robert Bronstein — president and co-founder of Scion Group, which owns more than 60,000 beds nationally — likened it to selling cruise tickets.

“Once you leave the dock, if you haven’t sold the room, you’re not going to,” he told Bloomberg.

Demographics are changing, too. As millennials age out of their college years, analysts warn demand could drop. [Bloomberg] — Meenal Vamburkar


Related Articles

arrow_forward_ios
An example of roll-off waste management (Credit: YouTube, iStock)

Big building owners prevent city from dumping container-pickup in trash-collection reform

“I can talk about erections all day”: NAR tech consultant’s bizarre fireside chat

Here’s a look at Blackstone’s industrial plays after its record-breaking portfolio purchase

From left: Jonathan Gray and Steve Schwarzman with Stuyvesant Town

Behind Blackstone’s “capital strike”

October Issue is Live

The Real Deal‘s October issue is now available to subscribers!

Blackstone buys Colony Capital’s warehouse portfolio for $6B

Council member Vanessa Gibson (Credit: New York City Council)

Commercial landlords face new fines as City Council passes anti-harassment bill

As House begins impeachment inquiry, here’s what we know about Trump’s Ukraine-real estate ties

arrow_forward_ios