New Frontier - Student Housing’s Burgeoning New Market

Student housing’s new role as institutional investor favorite has found a flood of new capital in the sector. The culmination of a stale job market, capital constrained universities, and an overall increase in demand for a college education has created a void of housing options on campuses across the country that private developers are quickly stepping into to fill.

The newfound notoriety has created intense competition at colleges and universities as developers seek out the next great project. Regional developers are s

uddenly finding themselves competing with national players for projects in their own backyard. So it begs the question, where is the next market that’s not overly saturated?

Community Colleges. Although not an entirely new market for housing it’s a woefully underserved market. The same reasons that have made student housing attractive for traditional four-year institutions are the same reasons community colleges will see an explosion.

With six million students already attending community college the Department of Education’s recent crackdown on for-profit institutions will surely send new students down a more traditional path if proposed legislation passes curbing federal financial assistance. It would seem that community colleges would be the initial benefactor of such legislation changes.

Additionally, many states have created mandates for themselves setting college graduations goals with associated legislation. Several of these states have or will pass legislation that will dictate that any state community college graduate will be automatically accepted to the state’s four-year institution to finish their education. This creates an attractive cost effective track for those students that either don’t have the resources to attend a traditional four-year institution in its entirety or did not initially have the grades and SAT or ACT scores needed.

Since community colleges, in general, will not enter such a capital-intensive venture the market will remain a developers’ domain.