Annex, a Scion community in Oxford, Ohio, which serves students from the University of Miami.
With the kind permission of Scion
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Consumers are increasingly concerned about the state of the economy, which affects another real estate sector – student housing.
The growth of rents in the sector slowed 0.9% in July in 200 colleges interviewed by Yardi. The average announced request rent dropped to $ 905 per bed, a decrease of 1.4% compared to the peak of $ 918 in March “while operators have trouble renting the remaining inventory,” according to the Yardi report.
For the prospect, from October to July, the growth of rents was on average 2.8%, less than half of the 5.7% recorded during the same period a year earlier and well below the 6.9% observed one year before that.
“What we see is falling up and down,” said Robert Bronstein, founder and CEO of Scion, one of the largest owners and operators of student housing in the country.
Scion has approximately 95,000 beds in 83 schools in 35 states, with more than $ 10 billion in assets under management.
Bronstein said that the lower end of the market, that is to say that students and parents who had the most difficulty in affording student accommodation, are now going back to the most expensive and expensive rental houses on the outskirts of campuses. High -end students and parents also change the course.
“I think people say:” You know what, a building that is three years ago, and it costs 30% less than a brand new building, and I was not going to use the roof bath anyway. I’m going to go with the cheapest option, “said Bronstein.
Students, he said, are increasingly serious about their living spaces and prefer co-work spaces and remote interview rooms for golf simulators and cinemas, which were in fashion ten years ago. High-end equipment, he said, no longer lead the occupation. Cost savings are now essential.
Scion plays on the intermediate market, acquiring properties mainly in major schools, including the University of Florida, the University of Alabama, the University of Oklahoma and the University of Mississippi, as well as the Texas A & M and the Clemson University.
“We were very active last year. We are very active this year. It could prove to be the most active year,” said Bronstein.
He said that after Cavid, there had been a change of investment to large flagship public universities – and it accelerates.
“High -level flagship public schools, 40, 50, 60,000 students, they publish year after year of growth in record registrations. They do not even get closer to the housing needs that exist on these markets,” said Bronstein, adding that they also take market share of small public universities and private schools.
“I don’t think you can be optimistic enough about Madison, Wisconsin, or Ann Arbor, Michigan, or Athens, Georgia, or Gainesville, Florida,” he said.
Going big, he said, also gives Scion an advantage of acquisition in the high interest rate environment today.
“We look at it as, ok, it is a market in which we want to be. We are not going to be there with 300 beds. We are going to be with three or four assets and several thousand beds and have a real operational lever effect,” said Bronstein.
Bronstein said it was optimistic because there had been a drop in new development due to higher construction and capital costs. This will increase the value of existing scion assets.
In his report on student housing prospects in 2025, the commercial real estate lender Walker and Dunlop predicted a “dynamic” year for the sector.
“After a period of slowdown in the volume of transactions due to macroeconomic winds, the market bounces while interest rates stabilize, institutional capital strengthens the conviction and registration in large universities continues to increase”, according to the report.
He noted that the Southeast Conference remains the most active conference for investment in student housing, the Big Ten conference taking momentum while the grandes écoles see record growth in registrations.
He also highlighted the same discrepancy of the buildings at higher cost stacked with bells and whistles that Bronstein noted.
“While luxury equipment has defined the sector, the latest trend is an evolution towards functionality, convenience and affordability,” said the report.