NEW YORK CITY—We've heard the refrain time and again, niche markets becoming mainstream investment targets—medical office, student housing, even the net lease sector. In fact that very subject is set for in-depth exploration at the upcoming CCIM THRIVE Conference, October 21-22. Taking place at the Westin Bonaventure in L.A., the conference will offer a special panel discussion entitled, “Niche No More,” featuring experts in each of the above-named fields to answer this very question.

For one of those experts, Doug Kligman, chief investment officer for New York City-based Vesper Holdings, the focus is student housing and the process of evolving from niche to mainstream actually took place over years, and in four steps. “In the 1980s, there wasn't a product type called student housing,” he tells The market was made up of “small apartment complexes and rental houses.”

Images of John Belushi may come to mind here, but the transformation, the “path to acceptance,” as Kligman calls it, began in the 1990s with “the first wave of large-scale, highly amenitized developments.” Still, he says, the market was comprised mostly of regional and local players.

Enter REITs, such as American Campus Communities and EdR, which legitimized the market. “And with national developers coming in, the quality of the assets improved,” says Kligman.

The Great Recession also had a major hand in propelling student housing into the scope of mainstream investors. “It was battle-tested and proven,” states Kligman, who says the sector “came out extremely well, with strong underlying fundamentals and rapidly growing enrollment in schools across the country, which allowed universities to maintain or increase their on-campus housing inventories. Due to budget cutbacks, universities were unable to grow their on-campus housing inventories in lockstep with burgeoning demand for housing during the recession. Universities had no choice but to turn to the private sector to meet their students' unmet housing needs.”

The sector was not without its bruises, and one of the lessons learned in that time was the advantage of moving living quarters closer to the campuses. And not all schools fared equally well. Kligman says it was the “destination schools” that held their own during the economic unpleasantness. “Today, what you're seeing is core, class A properties in close-in locations that whet the appetite of both institutional and private money.”

For Vesper, the acquisition game is on, and Kligman reveals that, at currently over 8,000 beds, the firm intends to grow its portfolio to 15,000 “within the next couple of years. We're in absolute growth mode right now.”

And while he says Vesper will look everywhere for its acquisition targets, “We like states like Texas that have favorable demographics, a lot of inward movement and job creation, so the schools are experiencing substantial growth.” The firm also owns properties in other states such as Michigan, Oklahoma, Kansas, Virginia and Georgia, and favors the above-mentioned destination schools, “major institutions with enrollments of 15,000 or more students.” It should be noted that while the firm is based here, it has a local portfolio of parking structures, office and multifamily. The student housing piece, the prime focus for the firm for a few years now, lives outside of the New York MSA.

With the recession passed and the lessons learned, Kligman reports that investment capital is coming in from all sources, and it's difficult to say who is the dominant player. “We're seeing a diverse group of investors, private and institutional. The window of opportunity is still wide open for firms such as ours to provide superior risk-adjusted returns to our investors.” And what could be more mainstream than that?


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John Salustri

John Salustri has covered the commercial real estate industry for nearly 25 years. He was the founding editor of, and is a four-time recipient of the Excellence in Journalism award from the National Association of Real Estate Editors.