Inside the Ownership Consolidation in Student Housing

This cycle, there has been substantial consolidation of student housing ownership across the country. According to Frederick W. Pierce, IV, of Pierce Education Properties, the consolidation—which has been a transition into more institutional ownership—has created a perfect storm for the market. As a result, student housing has matured into a more efficient asset class.

“This consolidation in student housing ownership is largely due to the management-intensive nature of the asset class providing the opportunity for best-in-class operators to attract institutional capital that wants to invest with scale,” Pierce, president and CEO of Pierce Education Properties, tells GlobeSt.com. “It’s a perfect storm, if you will, as experienced, best-in-class operators can deliver superior operating and investment performance, while their increasing economies of scale also reduce operating expenses on the margin for these growing companies.”

This has been a signature trend in the student housing market this cycle. “There has been tremendous consolidation in the student housing industry during the 2010 decade,” explains Pierce. “This is evidenced by the fact that the Top 25 Owners’ holdings in the AXIO 175 markets has grown from 62% in 2010 to 71% in 2017.  During this same period, the average number of beds owned by the Top 25 Owners has nearly doubled from 11,056 to 21,250 and the minimum beds necessary to qualify for the Top 25 has also nearly doubled from 2,766 to 5,401.”