Source: Student Housing Performance is Second Only to Industrial
Nearly two years into the pandemic, the student housing sector has performed second to only industrial, according to Frederick W. Pierce, IV, president and CEO of Pierce Education Properties. Concerns about university course-delivery methods and closing of on-campus residence halls, had either no impact or a positive impact on the off-campus student housing sector during the pandemic, he says.
“Debt and equity capital for new acquisitions and development initially seized up in second and third quarter 2020, but began flowing again with fourth quarter investment sales of approximately $2.5 billion, reaching the third-highest volume fourth quarter in the last six years,” Pierce says. “Capital is flowing into the sector in 2021 at historic levels as multifamily cap rates have compressed into the 3s and even high 2s, and student housing looks comparatively cheaper.”
When pondering how the pandemic impacted on-campus versus off-campus student housing communities, Pierce says the pandemic dramatically impacted on-campus student housing. In April 2020, virtually all American universities closed residence halls and sent students home for the balance of the academic year (AY), providing housing fee rebates.
“Social distancing protocols required that universities de-densify their on-campus housing for AY 2020-2021 20 to 50 percent, representing a similar loss of housing revenues,” Pierce says. “Some have increased on-campus occupancies for AY 2021-2022, but aren’t expected to return to pre-COVID occupancy until AY 2022-2023.”
Conversely, off-campus student housing occupancies were down only 3 percent for AY 2020-2021 and exceed pre-COVID levels for AY 2021-2022. Fall 2021’s freshman class was projected to be the largest in more than a decade.
“Our portfolio achieved its highest historical occupancy in fall 2021. The majority of our properties are 100 percent,” says Pierce. “Incoming freshman spent their senior year studying online and desperately wanted to go to college, irrespective of method of course delivery.”
Lisa Brown has decades of experience in corporate communications and marketing management with organizations including Coldwell Banker Residential, Grubb & Ellis, Marcus & Millichap, NAIOP, SIOR and ALM.
In those positions, she worked in conjunction with chief executive officers and chief marketing officers to create corporate messaging, cohesive branding standards, strategic marketing plans and thought pieces. Brown is a frequent speaker at industry events and an editing adjunct professor for an online course. She has a master’s degree in mass communications from San Jose State University.