At the beginning of the real estate recovery a few years ago, one of the main catalysts was the multifamily sector, specifically student housing development.
Student Housing Development Gets a Face Lift
Student housing development has taken on a different look during this process. New student housing projects pre-recession were garden style – 2 story buildings , situated on several acres, and 3 + miles from campus. The current trend in development is focused on aging inventory redevelopment- 4 plus story buildings, parking garages, feature a ground level retail component, and are walking distance to campus. This live/work/play setting is something that today’s college students are demanding.
Local Example: Tallahassee Market
The following statistics regarding the Tallahassee (Florida State University) student housing market were specified in the Apartment Seekers 2014 Rental Market Report:
- Within .5 miles to FSU occupancy is 96% , average rent per bed $600
- Within 0.5 – 1 mile to FSU occupancy is 94%,average rent per bed $461
- Within 1-2 miles to FSU occupancy is 90%, average rent per bed $418
- More than 2 miles to FSU occupancy is 87%, average rent per bed $386
Therefore, investors are now focused on Class A, urban infill, close to campus opportunities. With a host of new developers jumping into the mix to offer this type of product, savvy investors are hedging their investments by protecting the future value of their prospective properties. They are able to accomplish this by offering superior locations to beat out any competition.
An example of what these types of properties can trade for is the 132 unit property called The Catalyst Apartments. Built in 2012 and located on West Madison Street (one block from the FSU campus), it sold for $285,000 per unit ($37.7 Million). It was purchased by a Saudi Arabian investment company, which shows the kinds of attention these properties are attracting.
The real estate axiom, “Location, location, location” definitely holds true for student housing in 2015.“Location, location, location” definitely holds true for student housing in 2015. Click To Tweet
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About Preston Hall – Preston has completed 130 transactions in the past 6 years in commercial real estate using his client focused service. He specializes in office, retail, and multi-family properties. Click here to read his full bio, or if you would like to contact him, you can call him at 850-877-6000 or email him at [email protected]