2021 Student Housing Market Overview and 2022 Outlook - Flipbook - Page 18
STUDENT HOUSING SALES VOLUME
Price (in billions) vs. Properties (based on assets priced $2.5mm+)
Student Housing Sales Volume
12.0
Returning to pre-pandemic transactional activity, the student sector saw an influx of new and existing capital sources to focus
investments back into the space. Stewarded by increased capital markets liquidity and the abundance of pent-up equity demand
awaiting deployment, 2021 saw a remarkable recovery compared to 2020’s activity. In 2020, the capital markets environment and
unprecedented macro uncertainty highlighted a pronounced flight to quality with capital sources particularly focused on stabilized
assets within walking distance of Power-5 schools. With the benefit of steadfast fundamentals, the prospect of the sector’s future
400
11.0
350
10.0
9.0
300
8.0
250
7.0
6.0
growth underscored by 4Q20 performance, and low-interest rates, 2021 started the year strong with capital widening the spectrum of
5.0
acquisition criteria.
4.0
200
150
3.0
Total capital flow in 2021 toward assets over $2.5 million increased by over 84 percent from the prior year, reaching a total of nearly
2.0
$11.9 billion in sales volume. The 2021 figure represents a 38 percent increase over the 5-year average and 89 percent growth over a 10-
1.0
year average. Transaction sale volume increased by an outstanding 109 percent between 3Q21 and 4Q21, closing out the last quarter
0.0
of 2021 with over $6.2 billion in sales volume. There were 361 single assets that traded hands in 2021, which is a 89 percent increase
100
50
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
0
over the prior year and a 51 percent increase over the 10-year average.
SH Sales Volume
Properties Traded
In a reversal from 2020, 2021 illustrated greater single-asset transaction volume than portfolio volume. In part, this is due to lenders
Source: Real Capital Analytics
revitalizing access to accretive financing options for private capital after taking a year to assess the performance of the student space
through the pandemic. Portfolio volume still made up a solid percentage of volume with Blackstone’s $784 million joint venture with
Landmark, and Harrison Street’s multiple portfolio transactions totaling nearly $2.5 billion. As 2022 entered scope, it was evident
The 2021 investment sales market had a record-setting year with consecutive growth over each quarter. Historically, investors and
institutional capital remained keen on gaining scale and pursuing major portfolio opportunities.
lenders have been sensitive to the timing of transactions as it relates to pre-leasing performance, as well as the timing of turnover
associated with the academic year. Many properties tend to be brought to market in late Summer and early Fall when pre-leasing
thresholds have been reached, and move-ins have occurred, with the anticipation of closing and funding before the end of the fourth
STUDENT HOUSING SALES VOLUME
quarter. Even with uncertainties surrounding university status and lagged pre-leasing in the early months of 2021, investment activity
picked back up to 2019 norms in Q1 and Q2, with a total of 107 properties traded. Furthermore, as the market proved stabilization by
Quarterly vs. Rolling 12 Month (based on assets priced $2.5mm+)
September, investment activity continued to increase through Q3 and Q4, more than doubling the number of single asset sales that
transacted in the first two quarters of 2021 – staying in the line with historic trends.
7.0
160
6.0
121
5.0
89
4.0
3.0
60
65
68
56
2.0
1.0
0.0
51
42
11
1Q19
2Q19
3Q19
4Q19
1Q20
Quarterly Totals
2Q20
to other asset classes. The continued evolution and influx of new investors that entered the student housing space in 2021 have
120
progressed the asset class further into mainstay institutional status. With U.S. student housing being more resilient to downward
100
United Kingdom, Singapore, South Korea, China, and the Middle East persisted. However, after a record-setting year for foreign capital
60
40
20
4Q20
1Q21
2Q21
3Q21
4Q21
0
macroeconomic pressures while providing outsized yield prospects, continued inflows of foreign capital based out of Canada, the
entering the student housing space in 2020, the buyer profile in 2021 returned to historical norms. The ability for domestic private
capital to source accretive financing options in stabilized Tier-I and Tier-II markets attributed to market share jumping to 58 percent doubling 2020’s percentage. The investment community’s confidence in the space, spurred by the resilience of the sector through the
pandemic, clearly positions the asset class to see increased activity throughout 2022.
Student housing transaction activity is expected to be heightened in 2022 as institutional and private investors, both domestic and
global, recognize the growth potential and strong sector tailwinds stemming from outsized national enrollment growth and the return
of international students. While interest rates are expected to rise to combat historically high inflation, the deep pool of investors and
abundance of low-cost capital seeking to enter the space suggest cap rates will remain low throughout the year. Moreover, pent-up
Properties Traded
demand remains in several underserved markets with functionally obsolete product – representing a continued opportunity for capital
Source: Real Capital Analytics
2 0 2 1 S T U D E N T H O U S I N G M A R K E T O V E R V I E W A N D 2 0 2 2 O UT L O O K
Investment in student housing continues to offer long-term stability, attractive risk-adjusted returns, and safe diversification compared
140
80
61
17
3Q20
160
investment.
NEWMARK
19