Multifamily Quarterly
Head of the Class
Once considered a niche sector by investors, student housing gets good
grades that are pushing it to the top of institutional investors’ asset rosters
Once viewed as an “outsider” in the multifamily business, student hous- ing has moved to the head of the
class, as institutional investors and developers—wary of the anemic conditions plaguing other commercial
real estate sectors—are
looking to enter the
recession-resilient market.
Over the years, student housing has
evolved from an unsophisticated business
with many off-campus, mom-and-pop operators to one that’s gaining institutional acceptance. Ever-increasing rents and record college enrollments are driving demand.
By Liz Wolf
“Student housing has become a fast-growing asset class as institutional investors
have become far more comfortable with
the sector’s dynamics,” says Dorothy
Jackman, a Clearwater, FL-based managing
director of Colliers International’s new
National Student Housing Group. “The
cottage industry of 15 years ago has given
way to a far more institutionalized property
type.” She points out that two of the best-performing REITs in the country last year
were student housing companies.
“While public REITs have set the stage for
the institutionalization of student housing,
there’s considerable private capital also very
active in the sector,” Jackman adds. “It’s a
very vibrant sector that’s becoming more
aggressive and competitive as partnering on
the private side continues to increase.”
Institutional investors have taken notice
and are chasing deals at aggressive rates and
terms. They’re seeking high-quality assets
and markets with high barriers to entry.
Major capital wants first-class, core assets
located close to major universities. With
mounting competition, smaller players may
be pushed out to tertiary properties.
In December 2011, Harrison Street Real Estate Capital paid $100 million for Sterling Central Apartments, adjacent to the University of Central Florida in Orlando.
It was the first purchase for the firm’s recently launched $200-million-plus fund that is focused on student housing, healthcare and storage sectors.
48 REAL ESTATE FORUM FEBRUARY/MARCH 2012
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