In recent years, the student housing sector has shown remarkable resilience and remains a strong investment option. We had the opportunity to speak with Jack Palms, VP of Acquisitions at RREAF Holdings, about what makes student housing stand out and its future prospects.
Q: The surge in investor interest in student housing is evident. What do you think are the driving factors behind this enthusiasm for the market?
A: Multifamily properties have always been attractive to investors, and student housing is no exception. However, what sets it apart is its additional layer of security for owners and investors. Historically, year-over-year performance in terms of rent growth and occupancy has been consistently strong.
Q: How does investing in student housing differ from other real estate sectors? What advantages does it offer to investors? Which specific attributes or metrics do they prioritize when evaluating opportunities?
A: One significant advantage of investing in student housing is that leases can be locked-in for an entire year without facing physical occupancy volatility like traditional multifamily properties. Additionally, many students have parental guarantees as an added layer of creditworthiness.
Investors typically look at factors such as school infrastructure quality, enrollment numbers (both current and projected), new initiatives by schools or universities nearby campus proximity , development activity on campus grounds ,and attendance at school conferences . At RREAF Holdings we focus on acquiring assets near Power 5 Schools (major athletic conferences) or Tier 1 Research Institutions .
Q : How does risk assessment differ between investments in traditional real estate versus those made into Student Housing ?
A : In simple terms , tenants are college students who come with varying levels o f creditworthiness insurance coverage potential damage risks . These risks must be carefully considered when assessing returns on investment whether it’s a core value-add project development deal .
What makes Student Housing such a resilient investment option especially during these challenging economic times ?
During previous economic downturns we’ve seen increased enrollment in higher education as individuals seek to improve their job prospects . This trend makes student housing a relatively predictable investment , with pre-leasing and lease terms providing a steady revenue stream for owners and investors while reducing the risk of vacancies .
What factors do you think will drive growth in the next 5-10 years ? Looking ahead , how do you see Student Housing evolving ?
With advancements in technology replacing many jobs, there may be a shift towards attending school to enter the workforce. As such, students will continue to prioritize large tier 1 institutions and look for properties near campus that offer desirable amenities.
For an extended version of this interview, please visit ApartmentBuildings.com.
