Privately-owned housing built specifically for college students is proving to be a lucrative real estate investment in certain markets, according to new data from Axiometrics. The study, was commissioned by property management software company AppFolio, concludes that these shifts could upend the dynamics in local real estate markets near major colleges and universities.
More than 47,000 new beds in privately-owned student housing are scheduled for delivery during the current semester. That is higher than any other year the study examined. The researchers expect more development to come online this time next year and suggest demand will remain high throughout 2017 and beyond.
“In all, more than 1,000 beds were added at each of 12 university markets. Of those, only two have more than 1,000 beds scheduled for 2017 delivery,” writes Alexis Hammond, manager of marketing communications at AppFolio. “But as more students go to college, more student housing will be needed, and the sector looks to continue to be profitable for developers and property owners.”
The report also found that while enrollment is up at many universities, growth is highest in the South. Texas A&M, in particular, is seeing a huge demand for student housing with enrollment up more than 15 percent.
Unlike colleges and universities in the northeast, many of these schools are located in smaller cities with populations between 100,000 and 200,000. Researchers say this means absorbing even a modest increase in student enrollment significantly impacts local real estate markets.
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