Investors Have High Hopes for Campus Real Estate

Colleges Open for In-Person Learning

As many colleges across the country reopen for in-person learning, some of the nation’s biggest property investors are pouring billions of dollars into off-campus housing. The likes of Blackstone (BX) and Brookfield Asset Management (BAM) are joining other real estate investors to buy and develop the housing. They are loading up their housing facilities with a slew of perks from video game rooms to gyms.

The investors are betting demand for off-campus housing will surge as more colleges and universities reopen after more than a year-and-a-half of pandemic shutdowns. It does not hurt that the off-campus housing market remained resilient during the pandemic. Many students chose to live in their campus housing and pay their rent even if they were learning remotely.

Brookfield Dips its Toes in Off-Campus Housing

Last month, Blackstone Real Estate Income Trust purchased a portfolio of eight student housing properties for $784 million. Preleasing for the portfolio, which is located near Florida State University and George Institute of Technology, has returned to levels seen in 2019. Blackstone’s rival, Brookfield, is in talks to create a joint venture with Scion Group, the student housing developer. The two plan to buy $1 billion or more in student housing properties. It would mark Brookfield’s first foray into purchasing campus housing.

As a result of the interest on the part of large and small investors, housing deal volume hit $2.52 billion in the first half of 2021. That is higher than the $1.68 billion in the same period a year ago and near the $2.96 billion seen in the first six months of 2019, before the pandemic struck.

Properties Near Big Schools Fare Better

Large investors are setting their sites on properties which are close to the nation’s colleges and universities with large enrollments. Housing at these large schools has performed relatively well during the pandemic. Meanwhile, student housing near smaller schools have not done as well for investors during the pandemic.

With most colleges and universities across the country for in-person learning, property investors see an opportunity. It will be interesting to see if this creates an oversupply of student housing or if investors’ bets pay off.

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