By Julie Littman
Bisnow contributor for Forbes
Student housing has graduated into a sought-after real estate class. More institutional investors are looking at student housing as a viable investment thanks to rising demand that continues to outweigh the current supply.
Though the sector has been dubbed “recession-proof” because of its ability to withstand the economic volatility of the financial crisis, student housing was not always popular among investors.
“When investors wanted to invest in the sector, the thought was that the assets were animal houses,” EdR CEO Randy Churchey said. But those days are long gone now, he says.
Multifamily is driven by job growth and job creation and when both of these economic factors experience declines, multifamily suffers. During economic downturns, people often go back to school, causing new enrollment to skyrocket and student housing real estate to become recession-resistant, Churchey says.
Demand for student housing has been high for the past few years and is only expected to increase with the rise of students going to college. Enrollment in postsecondary institutions is expected to increase 14 percent to 23 million by 2024, according to the National Center for Educational Statistics. As more millennials continue to pursue higher education, it will further fuel demand.
Even while enrollment rose over the past few decades, universities were not keeping up with student housing development, which has led to the current need, industry observers say.