LAS VEGAS—Student housing has garnered the interest of the commercial real estate investment community nationally and along with it, comes research reporting and expert insights in to the opportunities and vulnerabilities of the property type. Approximately 200 attendees came to RealShare Student Housing at Las Vegas’ Encore on Thursday to hear whether student housing is a viable long term investment.
According to panelist Kelli Smith, national accounts manager at Axiometrics Inc., the most important thing is to pay attention to more than the macro trends and headlines. “On a national level, enrollment is down, but that is taking into consideration all school types,” Smith says. “It is slated to improve, rebound and rise in the coming years.”
Stephanie McCleskey, director of research at Axiometrics, added that “when looking at enrollment growth in student housing, you have to dig down to get the real story. You have to look at the full, overall picture and break it down by university and by property.”
As for student housing starts, McCleskey pointed out that for 2015, there are about 50,000 beds expected to be added in the student housing arena all around the county. “For Fall 2013 through Fall 2015, activity is the highest from May to October each year,” she said. “Start dates can range based on attributes such as location, style and size of property.”
What does that mean 50,000 number mean? According to McCleskey, “maybe it tells you how big the student housing industry is. “It doesn’t mean that it will impact every university out there or every portfolio of universities. It shows a trend but doesn’t paint the picture of what is really going on.” She adds that “Between fall of 2013 and fall of 2015, there are about 170 different universities that will be getting new beds.”
As for the average distance from campus, the Axiometrics team says that the average distance from campus has decreased over the past few years from about one mile in previous cycles to about 0.6 miles in the current cycle. “Properties are getting built closer to campus.”
When calculating what the rent per bed is by distance, Smith notes that “Properties on average are charging a premium for being close to campus, but there are some properties that are two to three miles out that are still able to charge a premium.” A great example of that, she said, are cottages. But again, she noted, “You have to be careful with the generalizations, but in general you are getting higher rents closer to campus.”
One of the most important things for a successful project, Smith explained, is having a great on-site leasing staff. “It can make a huge difference in how your property is doing,” she said. “Student housing is very sensitive to reputation.”