An Insider’s Perspective on Student Housing
- Mar 26, 2021
The COVID-19 pandemic shuttered schools and universities and altered the learning experience for students across the entire country. Although shelter-in-place orders and social distancing rules forced universities to send their students home, some of them still favored living in student housing over moving home with their parents.
Core Spaces has recently formed a $1 billion joint venture with two global real estate investors. The partnership plans to acquire and operate student housing properties in leading university markets across the country. “Off-campus student housing has proven again to be resilient,” John Wieker, executive managing director & CIO of Core Spaces, told Multi-Housing News. “Since the onset of COVID-19, our portfolio has maintained collections above 99 percent and only experienced minimal occupancy declines,” he added.
In the interview below, MHN asked Wieker about the company’s investment strategies and what makes student housing an appealing real estate sector during the era of online learning.
How does the recent $1 billion partnership fit into your business strategy?
In recent years, our business strategy focused on building a portfolio of student-oriented assets with an emphasis on best-in-class locations at Tier 1 universities. This strategy has led us to focus more heavily on developments. However, throughout the pandemic, we saw continued opportunities to fill a liquidity gap in the transaction market by increasing acquisitions at below replacement costs.
What markets are you targeting and why?
We’re targeting Tier 1 university markets that we have monitored and determined have above-average long-term enrollment growth prospects and high barriers to entry. Our development experience gives us a highly informed perspective on barriers to entry in any given market.
Why is it a good idea to invest in student housing during these unprecedented times?
Off-campus student housing has proven again to be resilient. Since the onset of COVID-19, our portfolio has maintained collections above 99 percent and only experienced minimal occupancy declines. Our preleasing for the 21/22 academic year is actually 3 percent ahead of the prior year as we enter the time that COVID-19 slowed leasing last year. Additionally, we’ve heard from our capital partners that student housing has outperformed most other real estate sectors since the onset of the pandemic.
Core Spaces will manage and operate the portfolio on behalf of the new partnership. Tell us more about the property management strategies you are planning to implement. How are you planning to tackle the pandemic-induced challenges?
Core Spaces is the first in the industry to bring a hospitality-driven model to student housing. By building upon this and other proven strategies, and constant innovation, we’ll ensure we bring value to the assets.
We’ve been successful at tackling the challenges of the pandemic to date due to our strong people culture. We’re fortunate to have committed team members that strive to provide the best customer experience resulting in same-store leasing ahead of last year.
How has your marketing strategy changed since the onset of the pandemic?
We continued to successfully drive interest and remained top-of-mind to our prospective residents, by staying connected and by maximizing technology to replicate the in-person experience. We achieved this through social media, video tours, virtual open houses, providing community outreach like safety kits, and highlighting measures we took to ensure safety and physical distancing protocols with enhanced cleaning and sanitation.
What are your predictions for the student housing industry in 2021 and beyond?
We think that 2021 will see improving student housing fundamentals. Occupancies will increase as more campuses return to having in-person classes. Additionally, new supply is likely to be subdued for the next 2-3 years as developers struggled to capitalize on deals during the health crisis. This creates an environment for the strong performance of well-positioned assets at Tier 1 universities.