As evidenced by the growth of the student housing sector over the last several years, student housing has come to be seen as a smart investment for a broad range of real estate investors and developers. Yet, as the industry has become mainstream, it has also become more competitive, with more supply in key markets as new operators — including myself — and investors have entered the space. This creates a challenge to developers, who must find ways to stand out to ensure strong leasing for new properties.
In parallel, student housing development has shifted strongly toward high-density product closer to campus. In this environment, assemblages and ground leases are more common, leading to an increase in costs to developers, with pre-development costs reaching $1-2 million before reaching the shovel-ready stage. Given this trend, it’s critically important to get it right early in the process. Thorough early-phase market assessment is critical to smart planning and design, supporting optimized occupancy, rental rates and net operating income (NOI) growth once the project has completed development.