The lure of student housing for builders is pretty basic: As college enrollment has exploded—jumping 38% to 20.4 million from 1999 to 2009, according to the Institute of Education Sciences and the U.S. Census Bureau—and as kids stay in college longer to graduate, the need for on- and near-campus housing has never been greater. “Student housing is one of the few sectors with a pulse,” observes Ken Grube, education group manager for Samet Corp., a Greensboro, N.C.-based multifamily builder.
Among the industry’s 50 largest multifamily builders, Samet is one of 11 that include student housing in their construction activities. Another is Charlotte, N.C.-based Campus Crest Communities, which started building student housing in 2004 and ended last year with 33 operating properties near campuses across the country, from which it generated nearly $95 million in revenue.
Campus Crest, which owns general contracting and wholesale supply companies, focuses on building apartments near colleges’ campuses in second-tier markets, such as the University of North Carolina’s Wilmington branch. The builder is scheduled to open six more properties by this fall in Wyoming, Arkansas, Oklahoma, Alabama, Maine, and Arizona, confirms its CEO Ted Rollins. He adds that his company has another 80 markets in its development pipeline for student housing.
Campus Crest, American Campus Communities, and Educational Realty Trust, are the three real estate investment trusts building student housing. Other prominent multifamily builders active in this sector includeThe Preiss Company, The Dinerstein Cos.’ Sterling University Housing division, and Campus Apartments in Philadelphia.
Private equity guys are also getting into the act. Dallas-based Fountain Residential Partners, a real estate acquisition and asset management firm that formed in 2010, is currently financing the construction of several student housing projects in Texas, Oregon, and Minnesota. At Texas Christian University, Fountain is working with Centerpoint Builders, a multifamily and commercial builder, on private student housing within walking distance of the campus that will include a parking deck, a weight room, a clubhouse, and a grilling area.