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4 Reasons Student Housing Continues To Gain Strength As An Asset Class

Student housing has come into its own as an asset class over the past few years. As other product types are plateauing, the panelists at Bisnow's Chicago Student Housing and University Development event Tuesday saidĀ the runway for student housing has no end in sight.

Here are four reasons why investor and developerĀ interest in student housing is strong, and continues to get stronger.

1. Students Are Staying In School Longer

The Scion Group Senior Vice President Jay Pearman
The Scion Group Senior Vice President Jay Pearlman

While college enrollments across the country have declined the past six years, The Scion Group Senior Vice President of Advisory Services Jay Pearlman noted the 20 million students enrolled in universities is a 40% jump from 1990. Moreover, those students are staying in school longer.

Pearlman said only 31% of students graduate within four years and 56% graduate within six years. More four-year universities have tougher degree requirements, and 1.5 million students start college needing some form of remedial courses.

That is having a trickle-down effect to the community colleges, which Pearlman said make up half of national college student enrollment. Approximately 39% of these students attend community college full time and are becoming traditional students. Nationally, 28% of community colleges offer housing, and The Scion Group is working with three community colleges to open housing for students.

2. Student Housing Is A Global Growth Market

Andrew Wiedner, Brian Thompson
Core Spaces Chief Investment Officer Andrew Wiedner and CA Ventures Executive Vice President Brian Thompson

CA Ventures Executive Vice President Brian Thompson said the U.S. student housing market is stable, but the real growth opportunities are international. CA Ventures has found success developing student housing in South America, where student populations in countries like Chile, Peru and Colombia tend to be in urban cores with little housing supply, and are denser than comparable North American cities.

Thompson said CA Ventures is taking its experience in the U.S. and applying it in these markets, focusing on commonalities like students, parents and safety.

3. Better Data To Determine Where Students Are Going To School

Blue Vista Capital Management Senior Vice President Brian Minnehan, Harrison Street Real Estate Capital Vice President Justin Gronlie
Blue Vista Capital Management Senior Vice President Brian Minnehan, Harrison Street Real Estate Capital Vice President Justin Gronlie

Harrison Street Capital Vice President Justin Gronlie said data collection from universities has improved over the years as student housing has matured as an asset class. Colleges with master leases for student housing projects give investors concrete enrollment numbers during the school year, and for owners to lease out empty rooms and beds at market rates during breaks. Firms like Axiometrics are now reliable sources for investors seeking student housing opportunities.

Blue Vista Capital Management Senior Vice President Brian Minnehan said better data collection allows investors to identify niche markets and to move beyond Tier 1 state university markets for opportunities. Blue Vista is checking down from premier state-run schools to secondary colleges, where enrollment is growing, for opportunities.

4. A Shift Toward Multiple Uses And Value

BKV Group Senior Architectural Designer Renato Gilberti, PMG Director Benjamin Brichta, EdR Senior Vice President Jason Taylor
BKV Group Senior Architectural Designer Renato Gilberti, PMG Director Benjamin Brichta, EdR Senior Vice President Jason Taylor

PMG Director Benjamin Brichta said luxury multifamily developers lifted inspiration from student housing in this cycle, with a focus on smaller apartment footprints and heavily amenitized spaces. Now, student housing developers are adapting mixed-use practices for their developments, and market demand in the sector is moving away from luxury amenities to value.

BKV Group Senior Architectural Director Renato Gilberti said mixed-use is critical to student housing developments today. It allows for multiple uses to attract different users, including market-rate and senior renters. Developments are designed to keep seniors and students separate, connected by the common amenities like retail and landscaping.

Here are more photos from our Student Housing and University Development event:

Chicago student housing investment
A crowd shot from Bisnow's Chicago Student Housing and University Development event March 13, 2018.
Chicago student housing development
A guest tests out a hololens from sponsor SONNY+ASH.
Brian Minnehan, Ari Krigel, Justin Gronlie, Brian Thompson, Andrew Wiedner
Blue Vista Capital Management Senior Vice President Brian Minnehan, Freeborn & Peters partner Ari Krigel, Harrison Street Real Estate Capital Vice President Justin Gronlie, CA Ventures Executive Vice President Brian Thompson and Core Spaces Chief Investment Officer Andrew Wiedner
Dave Pezza, Renato Gilberti, Benjamin Brichta, Jason Taylor
Pircher, Nichols & Meeks partner Dave Pezza, BKV Group Senior Architectural Director Renato Gilberti, PMG Director Benjamin Brichta and EdR Senior Vice President Jason Taylor