NMHC Student Housing Conference: Cap Rate Spread Narrows; More Data Needed

Chicago —  The 12th annual National Multifamily Housing Council’s (NMHC) Student Housing Conference & Exposition took place in Chicago Sept. 30 to Oct. 2.

Business leaders representing many facets of the industry have been participating in the event since 2002, with an eye on growing this popular sector of multifamily housing conscientiously and to develop standards, promote best practices and share insight on some of the latest trends in development, capital markets, management and an always demanding requirement of this industry to supply some of the fastest Internet found in apartment environments anywhere.

Speakers discussed how the common critique of this business — a lack of reliable, consistent data — needs to grow beyond a measurement of beds and rents in given regions. What’s needed, said Rob Bronstein, President of The Scion Group, is a way to quantify how rent matches up with all that is prized about student housing assets: proximity to campus or which amenity proves to be the most popular and why. Dorothy Jackman and Brian Ward of Colliers International presented financial and economic data and observations, namely that global capital will likely be a big theme in 2015 and that cap rates for multifamily and student housing are very nearly the same this year.

The positive key markers outweigh the negative, Jackman said, pointing out that in addition to the cap rate spread narrowing, job growth is up, there is an increase in GDP, population growth among the 14- to 24-year-old set, and an increase in the number of high school graduates electing to attend college. Oversupply, panelists stated on many different occasions, is not as much of a concern as it's made out to be.Buyers in student housing are mainly private, with private companies in the purchaser role of 67 percent of all transactions so far in 2014, whereas a majority (53 percent) of buyers were REITs in 2012. Most acquisitions are made in the Southeast region, and Florida, in particular, is booming. Some markets, such as Tallahassee, are experiencing very high rates of new supply.

Some of the industry’s busiest developers shared updates on projects currently going up or recently opened. Leaders from CA Student Living, Sterling University Housing, Aspen Heights and Landmark Properties talked about their high-end projects in Missouri, Oregon, Arkansas, Texas, Colorado and in many other cities, almost all located near public universities. Although construction costs rise each year, dramatic properties with lush amenities continue to wow students and parents, and there is a robust pipeline of new projects yet to come. The  developers discussed some of their most sought-after amenities, which included climbing walls, bicycle storage and 'bum-a-bike' programs, water basketball and volleyball, 3D theater rooms and even poolside yogurt delivery. LEED status and sustainable design go a long way with the Millennial crowd, said Brian Dinerstein of Sterling.

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