In a recent episode of America’s Commercial Real Estate Show, the host welcomed Brent Little, the President and CEO of Fountain Residential, to delve into the multifaceted world of student housing. Fountain Residential has been operating exclusively in the student housing sector for nearly a quarter of a century, developing over 50 projects across the United States valued at around $3 billion.
The show’s host and Little discussed the unique aspects of student housing, including its operation, pricing, and rental structure, which differ significantly from traditional multifamily real estate. Little explained that student housing is typically rented per bed or bedroom, as most students and their parents lease a suite within a larger unit, each with separate leases.
The conversation ventured into the notable decline in new starts in the student housing sector, which Little attributes to multiple factors. The difficulty of securing good sites within close proximity to campuses, the challenges of zoning and permitting, and the rising cost structures have led to a reduction of about 30% in new starts. Despite this decline, rents and occupancy rates suggest a demand for more student housing.
Highlighting the evolution of student housing, Little shared how these projects are focusing more on wellness with amenities such as saunas, cold plunge pools, Pilates reformers, and game rooms. Study rooms that can be converted for Instagram influencers and content creators have also been introduced, reflecting the demographic’s changing lifestyle and income sources.
Despite the declining 18-22-year-old cohort, Little shared that universities are still seeing average enrollment growth of around 2% per year. He also touched on the impact of international students on student housing, stating that while there are some effects, they are not significant enough to impact leasing or business operations.
The host and Little also discussed the emergence of mega deals in the sector, with single development projects housing up to 2,000 beds. These mega deals, while exciting, pose questions about potential buyers and financing options, with some brokers suggesting the possibility of selling to multiple buyers.
Hawkins Commercial Realty Local Insight. Turning the spotlight on South Florida, the region’s tri-county area of Miami-Dade, Broward, and Palm Beach is home to numerous universities, including the University of Miami, Florida Atlantic University, and Nova Southeastern University, and others, including a planned $520M campus for Vanderbilt in West Palm Beach. This dense university presence could make the region a potential hotspot for the student housing sector. Given the trends discussed during the show, it would be interesting to observe how the South Florida market adapts and capitalizes on the evolving student housing landscape. With the right strategies, these trends could spur significant development and growth in the region’s student housing sector.