Annex, a Scion community in Oxford, Ohio, that serves students of Miami University.
Courtesy of Scion
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Consumers are increasingly concerned about the state of the economy, and that is impacting yet another real estate sector – student housing.
Rent growth in the sector slowed to just 0.9% in July across 200 schools surveyed by Yardi. The average advertised asking rent fell to $905 per bed, a 1.4% decrease from the $918 peak in March “as operators struggle to lease remaining inventory,” according to the Yardi report.
For perspective, from October through July, rent growth averaged 2.8%, less than half the 5.7% recorded during the same period a year earlier and well below the 6.9% seen a year before that.
“What we’re seeing is fall-off at the top and the bottom,” said Robert Bronstein, founder and CEO of Scion, one of the country’s largest owners and operators of student housing.
Scion owns roughly 95,000 beds across 83 schools in 35 states, with over $10 billion in assets under management.
Bronstein said the lower end of the market, that is, students/parents who were struggling most to afford student housing, is now going back to the more historic, cheaper rental homes on the outskirts of campuses. The higher end student/parent is also changing course.
“I think that people are saying, ‘You know what, there’s a building that’s three years old, and it costs 30% less than a brand new building, and I wasn’t going to use the hot tub on the roof anyhow. I’m going to go with the less expensive option,'” said Bronstein.
Students, he said, are increasingly serious about their living spaces and prefer co-working spaces and remote interview rooms over golf simulators and movie theaters, which were all the rage a decade ago. High-end amenities, he said, no longer drive occupancy. Cost savings are now paramount.
Scion plays in the middle market, acquiring properties mostly at large schools, including the universities of Florida, Alabama, Oklahoma and Mississippi, as well as Texas A&M and Clemson University.
“We were very active last year. We’re very active this year. This may turn out to be the most active year,” said Bronstein.
He said after Covid, there’s been a shift in investment toward large, flagship public universities — and it’s accelerating.
“The top-tier, 40, 50, 60,000-student flagship public schools. They’re posting year after year after year of record enrollment growth. They’re not even coming close to being able to satisfy the housing needs that exist in these markets,” said Bronstein, noting that they are also taking market share from smaller public universities and private schools.
“I don’t think you can be bullish enough about Madison, Wisconsin, or in Ann Arbor, Michigan, or in Athens, Georgia, or Gainesville, Florida,” he said.
Going big, he said, also gives Scion an acquisition advantage in today’s high-interest-rate environment.
“We’re looking at it like, OK, this is a market we want to be in. We’re not going to be in it with 300 beds. We’re going to be in it with three or four assets and several thousand beds and have real operating leverage,” said Bronstein.
Bronstein said he’s bullish because there’s been a drop-off in new development due to higher costs for construction and capital. That will increase the value of Scion’s existing assets.
In its 2025 student housing outlook report, commercial real estate lender Walker and Dunlop predicted a “dynamic” year for the sector.
“After a period of slowed transaction volume due to macroeconomic headwinds, the market is rebounding as interest rates stabilize, institutional capital builds conviction, and enrollment at major universities continues to rise,” according to the report.
It noted that the Southeastern Conference (SEC) remains the most active conference for student housing investment, with the Big Ten gaining momentum as larger schools see record enrollment growth.
It also highlighted the same shift away from higher-cost buildings stacked with bells and whistles that Bronstein noted.
“While luxury amenities once defined the sector, the latest trend is a shift toward functionality, convenience, and affordability,” the report said.
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