Student Housing Survives Pandemic and Investment Returns

The pandemic can’t keep student housing down. In fact, it may even be graduating to a new era as college students return to in-person classes across the country.

Property investors are spending billions of dollars on student housing while developing off-campus options for new and returning students. Developers are also adding perks to entice students, including gyms, video game rooms, fast Wi-Fi and swimming pools, according to the Wall Street Journal.

The volume of student housing deals surged from 2020, when some came before the pandemic. JLL reported $2.5 billion in deals in the first half of 2021, up from $1.7 billion the previous year. While that’s below the almost $3 billion spent in the first half of 2019, that may be only a matter of time.

Last month, Blackstone Real Estate Income Trust announced a $784 million joint venture with Landmark Properties to acquire and recapitalize a 5,400-bed portfolio. Moreover, Brookfield Asset Management has engaged Scion Group in discussions on a $1 billion student housing venture that would be Brookfield’s first step into student housing.

Demand is rising along with investor spending. Occupancy rates are up around 3 to 4 percent from last year as colleges welcome back students and many enact vaccine mandates in a bid to ensure in-person classes. It’s still down 2 to 3 percent from 2019.

The market last year was buoyed by students who decided to live in housing near campus, even as remote classes became the norm during the school year. Investors are building on that momentum, investing near large schools with big enrollments.

Student housing was already hot before the pandemic: an average of over 40,000 beds was added annually between 2012 and 2019. The National Multifamily Housing Council says the market could expand by 700,000 beds in the next decade.

[WSJ] — Holden Walter-Warner

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