Student housing doesn’t get the attention given to traditional multifamily developments or other major commercial real estate sectors. But that doesn’t mean there isn’t plenty to be excited about in this “niche” property type.
Axiometrics points out that student housing occupancy rates were 96.3 percent at the end of November, a rise from 95.8 percent during the same year-ago period. Landlords in pretty much ANY real estate sector would be happy with those numbers. Student housing developments tend to perform the best. Within a half mile from campus occupancy came in at 96.7 percent, while those a mile away or more averaged 95 percent.
Part of what was driving this tight occupancy, similar to multifamily, is a lack of new student-housing product on the market. There were 47,394 new beds that came online during the last fall semester. Though that is considered a good year in the industry, it was down from 63,000 during the same period in 2014. The University of Arkansas is forecast to see the most new beds coming online this year; Louisiana State University saw the most in 2015, according to Axiometrics.
ABODO, an online-renting service said that new student housing amenities are being included in the bulk of the new construction. A lot of these projects include amenities that one is more used to finding in a luxury multifamily development than the student-housing stock of old. Among what students can find nowadays in student housing environments include swimming pools, free Wi-Fi, fitness centers and communal areas for studying and social activities.
Some major student-housing developments in the works were already announced so far this year across the country. The University of Michigan, in Ann Arbor, could be home to a 14-story tower, proposed by Collegiate Development Group. The University of California system plans to add 14,000 beds at several schools over the next few years. In New York State’s Hudson Valley, the Hudson Valley Community College is reportedly getting a $20-million development, proposed by The United Group of Cos.
American Campus Communities, one of the largest REITs in the sector, had a strong third quarter. The firm’s rental rates rose 2.9 percent year over year during the quarter, while its FFO and NOI also saw positive results. Late last year, American Campus Communities also built a facility of nearly 1,600 beds at Arizona State University.
Sure, student housing isn’t likely ever going to get the attention given to the hot multifamily market, but it’s not a commercial real estate sector that one should overlook.