News release

New investors make student housing sector more competitive

November 11, 2021

JLL’s Capital Markets group finds student housing sector rebounding as in-person learning continues

Cierra Lacasse

Hotels & Hospitality and Capital Markets
+ 1602 648 8701

CHICAGO, November 11, 2021 – After a tumultuous year in student housing commercial real estate, the return of students to colleges and universities is providing a boost to the sector with increased investor interest and demand from not only traditional student housing investors but new entrants as well.

In 2020, the total U.S. transaction volume for the sector was $6.25 billion, with only $1.68 billion in the first half. In the first three quarters of 2021, the market has seen $4.85 billion in transactions, with $2.52 billion in the first half of the year. Senior Director Teddy Leatherman with the JLL Capital Markets National Student Housing team stated that she anticipates the fourth quarter of 2021 to be exceedingly busy, as over the past four weeks, the team has conducted over $1.5 billion in broker opinion of values for student housing assets.

“With how compressed multi-housing cap rates have become, investors are focusing on yield,” said Leatherman. “Right now, we are seeing a spread of 80 basis points between student housing and multi-housing cap rates, and we are seeing more multi-housing investors looking to buy into the student housing market. This has made our sector more competitive.”

With foreign capital and institutions not as active in 2020, private capital was able to take the lead in terms of transaction volume. However, as JLL Senior Director Stewart Hayes notes, that trend is reversing with foreign and institutional investors deploying capital in meaningful volumes once again.

“Some of these new entrants are conventional multi-housing investors and some are experienced commercial real estate investors who have historically focused on other product types but, because of how resilient student housing has proven to be historically, see this as an opportunity to invest,” Hayes said. “In some of our recent assignments, new entrants have totaled up to half of bidders.”

In fact, JLL found that two-thirds of the active family offices today were founded after the year 2000 and have a combined net worth of over $10 trillion, meaning they have a lot of capital to deploy. JLL also has found the pandemic has not had a major impact on new deliveries.

“The student housing sector did experience a flight to quality during the pandemic and investors were focused on core assets at Tier I universities,” added Leatherman. “However, Tier II and III markets have also been pricing aggressively as many conventional multi-housing investors are interested in those assets given the yield premium over conventional multi-housing.”

Since the pandemic brought upheaval to higher education, colleges and universities have faced daily challenges in ensuring the health and safety of current students and staff, while restoring prospective student confidence as decisions are made about whether continuing their education is the right choice—and where. A new survey by JLL indicates that factors attributing to student health and safety are top of mind for parents. Over 570 colleges and universities have put vaccine mandates into place for students to return to campus this fall, but with some markets seeing student housing fully leased and admissions widening across the country, the JLL Capital Markets student housing team has not seen that as an impediment to enrollment numbers so far.

“We have seen a surge in applications for the upcoming year, and several schools are quoting some of the largest freshman classes in history,” said Senior Director Scott Clifton. “Robust enrollment numbers correlate to higher rental rates for student housing properties, which leads to strong property performance and rental growth.” 

Capital is also abundant for financing student housing developments. Notable transactions announced this year include Fountain Residential Partners securing joint venture equity for the development of Dockside Clemson at Clemson University in Clemson, South Carolina. Other notable examples include Greystar and Star America obtaining two construction loans for student housing developments – Union on Broadway at University of Oregon and Lakeview at University of Washington.

“The financing markets are really improving dramatically for student housing,” said Senior Managing Director Doug Opalka with the JLL Capital Markets National Student Housing team. “As a stark difference from this time last year, the debt liquidity in the sector is extremely healthy and improving daily. We have a number of transactions closed and ongoing with the agencies, life companies, debt funds, and banks, at leverage and pricing that is really driving strong returns for the buyers of these assets. We are extremely bullish for the continued stability in the sector and the increased liquidity from lenders, particularly as we enter 2022.”

JLL Capital Markets is a full-service global provider of capital solutions for real estate investors and occupiers. The firm's in-depth local market and global investor knowledge delivers the best-in-class solutions for clients — whether investment sales and advisory, debt advisory, equity advisory or a recapitalization. The firm has more than 3,000 Capital Markets specialists worldwide with offices in nearly 50 countries.

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About JLL

JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. JLL shapes the future of real estate for a better world by using the most advanced technology to create rewarding opportunities, amazing spaces and sustainable real estate solutions for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $16.6 billion in 2020, operations in over 80 countries and a global workforce of more than 92,000 as of June 30, 2021. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit