Sean Baird

Sean Baird: What’s Selling in Student Housing

by Katie Sloan

Higher interest rates, softening cap rates, and an uncertain insurance environment are making it difficult for many student housing buyers and sellers to get deals done. 

It’s important to understand that the overall student housing industry is performing very well, with occupancies and rental rates continuing to rise over the past couple of years. However, macro-economic factors like interest rate hikes are putting downward pressure on pricing and making this a more difficult deal environment.

To illustrate the impact of these factors, consider these statistics: U.S. student housing sales closed from Q1 through Q3 last year totaled roughly $23 billion, while this year during the same timeframe sales totaled only $4 billion. And this year’s figure includes QuadReal’s acquisition of the remaining 50 percent stake in 20,000-bed CA Student Living’s portfolio of nearly 50 properties.

From the beginning of 2023 through November 2023, capitalization rates have increased an average of 70 basis points, putting pricing strain on even well-performing assets. In addition, coastal states prone to massive storms, such as Florida and Louisiana, are facing 100 percent to 200 percent increases in insurance pricing, which is making it hard for buyers to pencil deals in those regions.

However, despite these economic headwinds, we are detecting certain patterns with the properties that are selling. 

With this in mind, the following are specific factors that we’ve recognized can significantly contribute to the likelihood a student housing property will sell in today’s challenging market. 

Located in a Power 5 market

Universities in a “Power 5” market are colleges in the five top-tier conferences for football, basketball and other NCAA sports. As some examples, the University of Tennessee, Clemson University, University of Central Florida and Florida State University all located in Power 5 markets.

While some colleges and universities have seen dips in on-campus enrollment since the COVID-19 pandemic, in Power 5 (or Tier 1) markets, on-campus university enrollments are growing and rental rates at student housing properties have seen phenomenal growth. It’s clear that students attending college in Power 5 markets want to be on or near campus and active in the university lifestyle.

Historically speaking, sales of Tier 1 properties account for approximately 70 percent to 75 percent of student housing transaction volume in the U.S. — and that remains the case even in today’s uncertain market. 

High-Quality Product

We’ve seen many investors interested in high-quality student housing properties with little deferred maintenance, and communities that match this description have had a better chance of getting to the closing table.

With the cost of construction as high as it is today, in addition to the higher cost of borrowing money, investors are attracted to student housing communities that don’t require immediate or shorter-term upgrades and repairs. 

Our team is seeing many investment groups chasing student housing deals with light value-add or operational upside potential. And in some cases, sellers who bring their student housing property fully up to current renters’ standards and up-to-date on any maintenance issues may have an easier time finding a buyer and commanding a price higher than the property would have achieved prior to the upgrades and repairs, depending on the buyer profile. 

Value-add opportunities in pedestrian university locations

A caveat to the above observation relates to student housing properties located in highly walkable university locations. Sellers of value-add properties with rental rate upside that are located in pedestrian university locations are finding buyers, even in today’s challenging market. 

Older product that has a good physical plant and middle-of-the-pack rents allows investors to upgrade units and chase rental rates upward, while remaining below the top of the market and, therefore, competitive.

Pricing an asset per the interest rate environment

This year, the bid-ask spread in student housing pricing has gotten wider. 

Student housing properties priced appropriately for today’s interest rate environment and buyer expectations – rather than pricing the asset at the very top of the market – are finding a larger buyer pool than those that aren’t. This is because buyers are hesitant to spend internal resources on even considering deals they feel they won’t get to the finish line due to the current high cost of borrowing money.

Sellers who price an asset in line with the current market can attract more interest and then have the ability to push pricing to a premium in a deal that will close.


In conclusion, while economic headwinds are impacting the velocity of the exchange of student housing properties, the market continues to perform well in terms of occupancy and rental rates. For those attempting to buy and sell student housing communities, certain factors, such as pricing properties properly and understanding the value of proper maintenance, can significantly contribute to the likelihood a student housing property will trade hands despite today’s challenging market. 

Author bio:

Sean Baird is senior vice president of the national student housing group of Colliers. He has over 10 years of commercial real estate experience and has been involved in over $2 billion worth of transactions since joining Colliers in 2011. He’s recently brokered sales of student housing properties near the University of Tampa, Oklahoma State University, Kent State University, University of Alabama, Coastal Carolina University and Georgia Southern University. 

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