You Learn: Why investors increasingly love student housing
Mar 18, 2024
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Real estate investor Brian Dinerstein and CBRE's Jaclyn Fitts discuss the resilience and growth of student housing post-pandemic. They highlight how student housing is insulated against rising interest rates, the advantages of investing in large public colleges, and the evolution of the student housing product. The podcast also delves into the challenges of rising construction costs, the impact of struggling small liberal arts schools on the sector, and the optimistic future outlook for student housing investments.
Student housing is less affected by rising interest rates than conventional multifamily housing.
Student housing has transitioned into highly designed modern communities with innovative amenities.
Deep dives
Resilience and Growth in Student Housing Industry Post-COVID
Despite initial concerns during the pandemic that student housing might fail, the student housing market has shown remarkable resilience and growth. Companies like the Dinterstein Companies have experienced significant progress, with occupancy levels and rent growth hitting all-time highs. Brian Dinterstein and Jacqueline Fitz discuss how the industry has rebounded post-COVID, outperforming the multifamily sector and showcasing robust performance for the future.
Evolution in Student Housing Amenities and Affordability
Over the years, student housing has evolved significantly, transitioning from standard accommodations to highly designed modern communities. Amenities have become a critical focus, with developments featuring innovative features like elevated swimming pools and unique unit designs. The sector emphasizes affordability while maintaining high-quality living spaces, adapting to changing student preferences and market demands.
Challenges and Opportunities in Student Housing Capital Markets
The rise in interest rates has impacted student housing capital markets, influencing transaction volumes and investment dynamics. While the sector has fared relatively well compared to other asset classes, the market faces challenges in aligning rent growth with increasing cap rates. Differences between student housing and conventional multifamily cap rates highlight the sector's unique investment appeal and potential for stronger returns.
Future Trends in Student Housing Industry and Investment Prospects
Looking ahead, the student housing industry anticipates continued growth and investment opportunities. With a limited development pipeline for the next few years, the sector's strong fundamentals, especially in power five universities, position it favorably for investors. Brian Dinterstein foresees the emergence of private and possibly public REITs in the student housing space, signaling a positive outlook for the industry's future performance and market expansion.
Student housing has become a darling of the multifamily asset class. Real estate investor Brian Dinerstein and CBRE’s Jaclyn Fitts explain how the sector has bounced back from pandemic-era challenges and offers enticing opportunities for investors.
Insights to Share:
Student housing has been better insulated against rising interest rates than conventional multifamily housing.
Large public colleges and universities provide the best environment for institutional grade multifamily student housing.
Student housing now is a much different product than what was developed two decades ago.
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