Harrison Street Raises $2.5B for Student Housing, Data Centers

Chicago-based Harrison Street Capital Partners is betting on student housing, senior housing and data centers. And investors are taking notice.

The firm closed a $2.5 billion investment fund dedicated to those in-demand asset classes last month, with 70 percent of the capital already deployed. Remaining equity will be put toward “acquiring well-located but underperforming assets, as well as those with strained capital structures in need of liquidity [and] offering distressed pricing.”

The news comes soon after the federal reserve lowered interest rates for the first time since the pandemic. High interest rates have been keeping some investors on the sidelines in the past few years, especially those who were considering putting money behind real estate development.

However, the Harrison Street fund’s initial investments were for developments. The first project it funded was a student housing complex at the University of Wisconsin that was recently delivered 100 percent pre-leased.

Student housing developments and data centers have been popular among developers and investors alike. Data center demand has been driven by the need for cloud storage and support for artificial intelligence. Companies including Google, Amazon and Microsoft have all began projects to expand their data center infrastructure

Major firms such as Blackstone, Brookfield and KKR have all followed the trend, making significant investments in the sectors.

The senior housing market has been growing as well but not on the same scale as student housing and data centers.

The new fund, known as Harrison Street Real Estate Partners IX, L.P, will have about $7 billion in spending power and is supported by a variety of investors.

They include public and corporate pension plans, Taft-Hartley plans, sovereign wealth funds, insurance companies and foundations and endowments, according to a news release.

Another Chicago-based firm recently closed out a 10-figure investment fund. Waterton raised $1.73 billion for a fund dedicated to multifamily value-add investments.