Developers head back to school, but not to study
National development firms, including Toll Brothers and Lennar Corp., are hopping on the student housing bandwagon, in an effort to better withstand the next recession, the Wall Street Journal reported.
Toll is buying land near the University of Maryland, College Park and Penn State University to develop upscale student housing, while Lennar broke ground in February on an off-campus apartment community near the University of Texas at Austin.
The goal is to expand into sectors that these developers believe is recession-resistant. During the crash, student-housing landlords increased rents, which are often paid by student loan servicers or helpful parents.
The residences will offer amenities such as resort-style pools, ice skating rinks and tanning beds — upscale services aimed to bring in the money.
In addition, most American colleges are short on beds by 1.5 million to 2.15 million. They also generally do not have enough money for dorm upgrades or new construction, which leads to reliance on the private sector.
However, Freddie Mac, which buys student-housing loans from originators, has counseled restraint. “You want to be careful that the market’s not overheating and you’re not getting ahead of yourself,” John Cannon, the head of multifamily sales at Freddie, told the Journal. [WSJ] —Zachary Kussin