What’s Driving the Boom of Commercial Real Estate Investment in Student Housing?

What's Driving the Boom of Commercial Real Estate Investment in Student Housing?

The student housing market is hotter than ever, particularly among foreign investors. As we noted in a recent article, roughly 20 percent of capital coming into the US student housing sector is sourced from abroad. This is a staggeringly high number when compared to the multifamily housing sector, for which cross-border capital only accounts for 5 percent of total investment.

Yet it isn’t just foreign investors who are being lured in by the student housing sector; US-based investors are also starting to realize the potential of student housing.

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Detroit Commercial Real Estate’s Big Comeback

Detroit Commercial Real Estate Don’t count Detroit commercial real estate as down and out. In fact, the Motor City is on the verge of becoming one of the greatest comeback kids the nation has ever seen – thanks, in no small part, due to the efforts of a small group of  commercial real estate investors.

Detroit is still a long way from its heyday. In the 1950s, Detroit was the wealthiest city per capita in the entire world. The strength of the auto industry bolstered the local economy, and the population swelled to an estimated 1.85 million people. In the decades that followed, de-industrialization crippled Detroit’s economy. As industry fled, so did residents. The population shrunk to just over 670,000. By 2013, Detroit’s economy had weakened to the point where the city was forced to file for Chapter 9 bankruptcy protection – the largest city to file for bankruptcy in U.S. history.

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How Foreign Investment in Student Housing is Driving the Sector’s Record Growth

How Foreign Investment in Student Housing is Driving the Sector's Record Growth

Foreign investment in student housing is on the rise for a number of reasons directly tied to the reputation surrounding American higher education.

Between 2000 and 2015, enrollment in U.S. undergraduate degree programs increased by 30 percent, from 13.2 million to 17.0 million. By 2026, that number is expected to increase to 19.3 million. Foreign-born students are making a significant contribution to this increase. International undergraduate enrollment has increased more than 17 percent and is expected to continue its double-digit climb over the decade to come.

And these trends are causing a boom in real estate’s student housing sector, particularly among foreign investors.

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Foreign Commercial Real Estate Buyers Flock to U.S. Hospitality Sector

As society becomes more globalized, people are traveling more – whether for work or pleasure. By some estimates, global travel is going to increase by 35% over the next decade. This has been a boon to commercial real estate’s hospitality sector, particularly here in the United States. Foreign commercial real estate  investors have picked up on the opportunity hospitality offers as an asset class, and in recent years, have started flocking to this market segment.

In 2015, U.S hotel transactions exceeded $43 billion. During the first three quarters of 2015 alone, foreign investors pumped $6.3 billion into hotel investments—or 20% of total deal volume. The amount of cross-border capital flowing to the hospitality sector was up 165% year over year.

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Innovation & Entertainment- The Future of Malls in America

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The future of American malls is in limbo. Since 2016, more than 1,500 stores have been slated to close, including blue chip names like JCPenney, Macy’s, Sears, American Apparel, The Limited, and Abercrombie & Fitch. The trend is nothing new, as customer traffic had started to slow more than a decade ago, causing many large department stores to abandon their leases. As the malls lost their largest revenue generators, they began to fail.

Some department stores are going out of business altogether like The Limited, recently shut down all 250 of its stores. Other stores, like Sears and JCPenney, are aggressively reducing their store counts to unload unprofitable locations. Sears is shutting down about 10% of its Sears and Kmart locations (around 150 stores) and JCPenney is shutting down about 14% of its locations, totaling 138 stores.

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How Rising Sea Levels are Impacting Miami’s Commercial Real Estate Market

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The inconvenient truths of climate change are no longer a minor inconvenience for south Floridians. Sea levels have risen an average of one inch per year in the Miami area– causing a dramatic shift in the local political and real estate climates. Estimates vary greatly on how much sea levels in southeast Florida will rise in the upcoming years. Conservative predictions project as little as two feet, with more comprehensive models projecting as much as six feet by 2060. The Florida Keys, for example, sit just six inches above sea level in some areas, while most of Miami’s prime South Beach real estate sits just four feet above the sea.

Comprehensive models, which were explored in a 2015 study by Princeton and Potsdam University professors, take into consideration established relationships between greenhouse gas emissions and previously unexplored connections between sea warming and sea level increases. The study 2015 effectively illustrates the compounding effect of rising sea levels, a notion prevalent in the science community.

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South Side Chicago’s Hottest Commercial Real Estate Deal Uses Historic Tax Credits To Reduce Capital Costs

South Side Chicago’s Hottest Commercial Real Estate Deal Uses Historic Tax Credits To Reduce Capital Costs

Trained as an architect and armed with an MBA from Cornell’s S.C. Johnson School of Management, Ryan Folger cut his teeth in Chicago on a project called The Roosevelt Collection. Working as the Director of Construction, he oversaw the development of the 1,200 space three level parking structure, 400,000 square feet of retail space, 342 condos, and the largest luxury cinema in Chicago featuring a cocktail lounge, VIP section, and 16 screens.

When the financial crisis slowed development in Chicago, Mr. Folger took a position as VP of Operations for Altisource Asset Management Corporation which, during his tenure, acquired a portfolio worth more than $1 billion. In 2016 Folger returned to Chicago and formed Anexis Development to specialize in identifying unique opportunities in underutilized locations while providing attractive returns to investors. His latest project, the Federal Street Lofts, is a 64,000 sq ft. loft conversion on the South Side of Chicago, a short walk from McCormick Place. With 12,000 square feet of office space and 24 residential units, the new development presents a tremendous opportunity for Anexis and its investors through the use of historic tax credits.

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