Student Housing: Current Market
Last week we attended the NMHC Student Housing Conference in Huntington Beach, CA. This sparked our review of the current student housing market climate and where the trends are heading as 2018 nears its end.
Continuing Rise in Enrollment
Enrollment in secondary education continues to rise on many campuses nationwide, with high school graduates attending college at record highs. In 2017, 20.4 million people in the U.S. were enrolled in a postsecondary degree, compared with 6.6 million in 1990, according to the National Center for Education Statistics. The undergraduate enrollment rate is projected to increase by 3% over the next 9 years, leading to a continuing high demand for student housing developments and rent costs to inevitably increase.
Increase in Competition
Increased demand will lead to more and more student housing developments, making the competition high for architects, builders and developers to create the best and most innovative projects. Extensive research is already being done for Generation Z and beyond, and how to appeal to their social preferences. In order to stay on top of the changing trends, researching who will be residing in these projects 10+ years down the road will go a long way.
Land Opportunity is More Challenging
Large parcels of land close to campuses are difficult to come by, so student housing developments will more commonly be placed on smaller, infill lots with a modest number of beds and onsite wrap parking. The competition between students attaining a spot in these high-end buildings will also be prevalent.
To add to the lack of large land parcel availability, the economics of finding a lot and building from scratch isn’t always an option for many markets. A solution to this is turning to existing student housing projects that are older and outdated to renovate for the current market. As the land vacancies become less and less, Value Add programs will increase.