The conversation in this video revolves around the topic of student housing in the commercial real estate market. The host of the show is joined by Carl Whitaker, the Director of Research and Analysis at RealPage, to discuss the current performance, trends, and future outlook of student housing properties.
The discussion begins with an overview of the rising interest in student housing from various investors, including equity and operating partners diversifying their holdings. Carl Whitaker highlights the strong performance of student housing properties over the past six to twelve months, with key metrics such as pre-lease, current occupancy, and year-over-year rent change reaching or approaching all-time highs.
One of the factors contributing to the robust performance is the late recovery nature of student housing compared to the conventional market. The return of students to campuses, coupled with a shortage of available apartments near campuses, has driven rent growth in student housing. Additionally, the discussion touches on the changing dynamics of enrollment growth, with certain types of campuses, particularly large brand name institutions, experiencing increased enrollment.
The conversation delves into the issue of new supply in student housing. Carl Whitaker notes a shift in construction trends and mentions that major metropolitan areas and campuses transitioning from commuter style to resident living present strong development opportunities. However, the challenges of navigating local political structures and neighborhood fabric can impact the delivery of new supply.
Financing for student housing properties is explored, highlighting the role of regional banks in providing construction financing. The conversation touches on the strong pre-leasing activity for the next school year, with record levels noted in various months. The difference in cap rates between conventional apartments and student housing is discussed, with student housing generally having higher cap rates.
Looking at the forecast for student housing, Carl Whitaker initially expresses a conservative outlook due to factors such as the slower growth in the 18 to 24-year-old population and affordability challenges related to tuition. However, unforeseen circumstances, including the return of students to campus and a rapid rebound in international enrollment, have shifted the outlook through 2025 and into early 2026.
The conversation also covers recent mergers and acquisitions in the student housing sector, highlighting the significant ACC and Blackstone acquisition. Carl Whitaker predicts a trend of consolidation in the industry, with larger players acquiring smaller ones, especially as technology and centralization become more important.
The discussion concludes with considerations for the audience, emphasizing the importance of campus-level dynamics in student housing investments and advising diligence in analyzing individual campuses. The final thoughts also include a reminder not to use the current performance levels as benchmarks for future expectations, considering the late recovery nature of student housing.
Overall, the conversation provides valuable insights into the current state and future trends of the student housing market within the commercial real estate sector.