Exploring Student Housing’s Development Potential
The sector—like multifamily overall—was hit hard during the pandemic. But now things are looking up!
Student housing is back, baby!
Sure, there was a development slowdown during the pandemic. After all, students were taking all their classes over Zoom—which they could do at home. There were supply-chain issues in practically every industry. The number of beer pong tournaments went down drastically. It was chaos.
Of course, even now the industry isn’t all rainbows and sunshine. (Is anything ever? Sigh.) As with other areas of multifamily, financing investment deals might be tough, and construction costs for new developments are still high. And students aren’t all flocking back to college. Jeff Adler, vice president of Yardi Matrix, told Denile Doyle in “Why Student Housing Is Earning High Marks From Developers” that, because of the pandemic, “most schools have (currently) not reached their full capacity and have capture rates of 50 percent to 60 percent.”
To quote the seminal classic “Dumb and Dumber,” “So you’re telling me there’s a chance!”
After all, COVID is no longer a public health emergency, and students are back in the classroom—and therefore need a place to live. And, overall, college enrollment numbers are coming back up. According to reporting from Doyle, enrollment is projected to increase to 17.1 million students by 2030. Preleasing numbers for beds are impressive as well, from 61.9 percent last fall to 69.7 percent. And rent is increasing! All good signs for a hopefully thriving-again sector.
And it seems those in the industry agree.
“Our bid sheets are as long as they’ve been historically,” Casey Schaefer, senior vice president & co-leader of CBRE’s national student housing team, told Doyle.