Student housing developers are making great profits as enrolment grows and on-campus housing are aging, Diana Olick of CNBC recently reported. As she visited "The Standard ", a luxury apartment which is not just a residential building, but a student housing at the University of Georgia in Athens as well, she observed students of this university line up at the edges of the rooftop's infinity pool, loud pops coming from the racquetball court, sweat dropping in the bright fitness center and concierge services being provided.
Wesley Rogers, CEO of Landmark Properties, the Georgia-based developer behind The Standard said " "What you've seen over the last several years has been more of an urbanization of student housing, where more institutional players are coming in and developing these higher-end, more urban-style properties to cater to the needs of today's college students."
Brendan Coleman, Managing Director at Walker & Dunlop, a commercial real estate financing firm explained as well that "Student housing in general is a relatively young industry. Developers really hadn't focused on student housing until about 20 years ago, and for the most part students were living in dorms that were built in the '50s or '60s."
Derek Lobo of RENX, on the other hand identifies the following critical factors why developers who are getting into the student housing market are discovering a wealth of opportunity:
1. Favourable demographics
The number of full time college students has been increasing for the past decade. These visiting students have more income than before as they are oftentimes backed by their parents and grandparents need to find their place which are safe and conducive to their educational experience. Such results to the increase in the demand for quality accommodations and good returns for those who are able to meet their clients' needs.
2. Post- secondary institutions look for private developers to house their students
Enrolment may be increasing but government funding is decreasing. Hence, universities and colleges focus on building research spaces and classrooms and leave the housing of their students to private companies.
3. Higher rents per higher rents per square foot is demanded for student housing
Student housing developments rent by the bed rather than by the unit. As students enjoy more disposable income, they are more willing to share space than the conventional type of renters and look for amenities to complement their experience.
4. The market has just begun to develop
One of the opportunities that developers see is that student housing is still in its early stage.
Last week, Realty Today laid out the advantages for parents to invest in rental properties.
