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Last year was one of the most active years in student housing investments, and 2022 is shaping up to be even stronger. Investors are making some supersized deals lately in the sector and betting that rents will continue to rise.
Blackstone Inc. made a big entrance into the sector with the company announcing the purchase of American Campus Communities Inc., a student housing owner. The deal is valued at $12.8 billion. ACC is the largest publicly traded owner and developer of student housing in the U.S.
“We think student housing is a compelling sector because it’s performed through cycles and has been really quite resilient over time,” Nadeem Meghji, Blackstone’s head of real estate for the Americas, told The Wall Street Journal.
Rents in student housing remained high throughout the pandemic, even as many students took classes remote during the early onset. But with scant construction of student housing over recent years, investors believe the growing demand will spur an increase in rents from the limited competition. A return of more international students to the U.S., following a decrease early on in the pandemic, will also likely give the sector a boost.
“In the past 12 months, there has been a tremendous amount of interest in student housing opportunities proximate to Tier 1 universities as the asset class continues to be extremely resilient.” Teddy Leatherman, a senior director in the Dallas office of JLL Capital Markets, Americas, wrote for Multi-Housing News earlier this year. “At the same time, we are seeing nontraditional student investors acquiring student assets at Tier 2 and Tier 3 colleges as they provide an attractive basis and strong yield compared to other asset classes.”