College-Town Real Estate the Next Big Niche?
This is a relevant article because we have two massive college campus upgrades/expansions underway in the area - John Jay College and Fordham University. The schools and their students are going to have an impact in shaping the community.
For some unhappy neighbors, this may conjure up images of ceaseless parties and beer cans galore. But some investors see something more propitious: a steady stream of revenue, for starters, and growth potential for years to come.
“The student housing market is a good niche opportunity today,” said Kenneth T. Rosen, chairman of the Rosen Consulting Group, a real estate and economics research company in Berkeley, Calif. “The demographics are excellent, and the demand is great.”
College enrollments have been on the rise as the baby boomers’ children — sometimes known as the “echo boom” generation — come of age. This group, born from 1982 to 1995, is about 80 million strong. Yet the supply of on-campus housing is becoming increasingly limited.
Student housing has already proved profitable for many investors. The capitalization rates — meaning the initial yields — can often exceed those on conventional multifamily homes, industry experts say.
But as student housing becomes more widely accepted by investors — and more expensive to buy — the gap is expected to narrow. Markets where land is in short supply — like New York, Boston, Chicago and parts of Florida and California — are already considered hot markets, according to Mr. Reid. Austin, Tex., is another favored spot.
The bulk of the estimated $160 billion student housing market remains controlled by independent companies and investment groups that operate mostly regionally. Institutional and individual investors can participate in some deals, usually for a minimum investment of $50,000 to $150,000.
Wall Street has been slower to catch on. “The capital markets weren’t quite sure how to look at this product type,” Mr. Reid said. “They still had what we could call more of the ‘Animal House’ view of what student housing was.”
But in the last couple of years, three real estate investment trusts specializing in student housing have emerged — GMH Communities Trust, American Campus Communities and Education Realty Trust — making the sector more accessible to passive investors with less money to invest. (Equity Residential also has some student housing properties in its portfolio.)
For some unhappy neighbors, this may conjure up images of ceaseless parties and beer cans galore. But some investors see something more propitious: a steady stream of revenue, for starters, and growth potential for years to come.
“The student housing market is a good niche opportunity today,” said Kenneth T. Rosen, chairman of the Rosen Consulting Group, a real estate and economics research company in Berkeley, Calif. “The demographics are excellent, and the demand is great.”
College enrollments have been on the rise as the baby boomers’ children — sometimes known as the “echo boom” generation — come of age. This group, born from 1982 to 1995, is about 80 million strong. Yet the supply of on-campus housing is becoming increasingly limited.
Student housing has already proved profitable for many investors. The capitalization rates — meaning the initial yields — can often exceed those on conventional multifamily homes, industry experts say.
But as student housing becomes more widely accepted by investors — and more expensive to buy — the gap is expected to narrow. Markets where land is in short supply — like New York, Boston, Chicago and parts of Florida and California — are already considered hot markets, according to Mr. Reid. Austin, Tex., is another favored spot.
The bulk of the estimated $160 billion student housing market remains controlled by independent companies and investment groups that operate mostly regionally. Institutional and individual investors can participate in some deals, usually for a minimum investment of $50,000 to $150,000.
Wall Street has been slower to catch on. “The capital markets weren’t quite sure how to look at this product type,” Mr. Reid said. “They still had what we could call more of the ‘Animal House’ view of what student housing was.”
But in the last couple of years, three real estate investment trusts specializing in student housing have emerged — GMH Communities Trust, American Campus Communities and Education Realty Trust — making the sector more accessible to passive investors with less money to invest. (Equity Residential also has some student housing properties in its portfolio.)
posted by rjgny2004 at 1:18 PM
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