Student Housing Getting More Mainstream in CRE

Julie Sorensen, Director  GRS | Corteq  (312) 476-7658  jsorensen@grs-global.com

Julie Sorensen, Director
GRS | Corteq
(312) 476-7658
jsorensen@grs-global.com

It wasn’t that long ago when student housing was considered a sub-sector of commercial real estate, but that is quickly changing.

Now this branch of the industry is experiencing a significant boom in development and interest by investors.

One interesting case study that Axiometrics points out is a former hotel and conference center near Syracuse (N.Y.) University being converted into a student-housing facility. This shows a pretty significant demand for the asset type, as hotels are usually very in demand in larger university towns because family members and alumni members want to visit the area.

Meanwhile, a report by the National Apartment Association cited a few years back illustrated that the changing tastes of millennials are shaping a new type of student-housing development trends. While the hotel in Syracuse might have been converted into a student-housing facility, a lot of what used to be crummy dorm-like structures are looking more and more like nice resorts.

Quality parking structures, swimming pools, free wifi and other amenities that would seem foreign in old dormitory style buildings are new expected by incoming students.

In Milwaukee, what could seem like a dream situation for students is taking place. A former Pabst Brewing Co. bottling plant is becoming Eleven25, a student-housing development for attendees of some colleges in the area. The facility has rooms from studios to four-bedroom dwellings. It also has a food court, theater, convenience store and a community bike-storage area, among other amenities.

On the investment side, National Real Estate Investor points out that transactions in the student-housing sector are mainly driven by private and international buyers. Groups such as Singapore’s sovereign-wealth fund and the Canada Pension Plan Investment Board are putting money into this asset class based on its potential upside for returns. Many investors are apparently seeing it as a good way to also enter the stable U.S. commercial real estate market.

Marcus & Millichap says that it has recently closed just over $1 billion in student-housing transactions. That brokerage firm, which is one of many that markets this asset class, also has 13 properties that it is actively putting on the market.

The student-housing sector is an exciting space to be in right now. GRS Group has plenty of experience with lenders and investors dealing with this particular property type, and can help all of your due-diligence needs in this sector. For more information or a quote, please call me directly at (312) 476-7658 or email anytime at jsorensen@grs-global.com

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