Austin, Texas — With approximately $4.8 billion in total sales volume and 133 individual transactions, 2015 has become the highest sales volume year in the history of the student housing sector, according to a year-end report by Austin-based FourPoint Student Housing Investments.
The sales volume seen in 2015 surpassed the previous sales volume record — seen in 2014 — by over $1 billion, while cap rates remained at a record low level.
Last year also saw a spike in pricing compared to 2014, with price per unit, per bed and per-square-foot all seeing a surge throughout the year. Much of this increase can be attributed to location, as a large amount of the product being delivered is located in core, urban areas with high rents and high development costs in order to keep locations pedestrian to universities.
The convergence of record low U.S. Treasury rates and increased desire for student housing has resulted in some of the most expensive trades and lowest cap rates ever recorded, according to FourPoint.
CMBS lenders continue to play a significant role in the overall capital markets space as well, as many of the CMBS-financed assets reach loan maturity. Congruently, a number of value-add properties will be taken to market as owners seek a viable departure.
REITS, sovereign wealth funds and institutional buyers continued to dominate the Class A acquisition space, with syndicators and private equity groups responsible for the majority of transactions in 2015.
Over 200 new properties totaling in excess of 92,000 beds will be delivered in student markets across the U.S. in 2015 and 2016. A slowdown in development is not projected, as locations pedestrian to campus continue to be a hotbed for development activity.
“2015 was by far the most active student housing investment sales market in the history of the business,” says Chris Epp, principal at FourPoint Student Housing Investments. “More than ever, there’s a high level of acceptance for student housing across all types of buyers of real estate. There’s also been a lot of new development so there is a lot for sale — it’s kind of a perfect storm.”
— Katie Sloan