With many of the 75 million “Echo Boomers” born between 1976 and 1994 headed to college this decade, student housing is becoming one of the apartment industry’s most important niche opportunities, according to a new research report by the National Multi Housing Council.
Student Housing 101: Where are the Opportunities? provides a snapshot of the current market conditions for off-campus, privately owned student housing in 64 college towns across the country.
“When you say student housing to many apartment firms, visions of the movie ‘Animal House’ quickly come to mind,” explained Jim Arbury, NMHC senior vice president. “Our analysis of over 1,500 privately-owned properties shows that student housing is a potentially lucrative market niche that could help the industry counteract the effect of rising home-ownership rates and a still somewhat soft economy.”
“For instance, we found that at least 27 markets have experienced housing shortages within the past two years,” noted NMHC Legislative Analyst Alex Hecht. “These markets suggest substantial development, ownership and management opportunities for private apartment firms.”
“In addition, much of the current student housing stock is aging,” said Hecht, who served as project manager. “At many universities, the average built date of the private student housing stock is in the 1960s and 1970s. Considering the higher expectations today’s students have of their college housing, this also suggests the student housing sector may have significant rehabilitation opportunities for interested apartment firms.”
The greatest increases in enrollment between 1990 and 2003 were concentrated in warmer states, including Florida, California and Arizona, according to the report. The top growth schools for undergraduate enrollment were not the same as the top growth schools for graduate students enrollment, which could have meaningful implications for the type of housing needed at individual universities.
One of the most common amenities in student properties is the inclusion of some sort of “utilities package” in the base rent. Most of these packages include water, and 11 percent include electricity and high-speed Internet access. This suggests that “bundling” may be a more important amenity for students than adult residents.
The 74-page report can be purchased for $500 by NMHC and National Apartment Association members and $750 for non-members at www.nmhc.org/Content/ServeContent.cfm?ContentItemID=3253.
Washington, D.C.-based NMHC is a national association representing the interests of the larger and most prominent apartment firms in the United States.
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