Annex, a Scion Community in Oxford, Ohio, serves Miami University students.
With the kind permission of Scion
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Consumers are increasingly concerned about the state of the economy, and this affects another real estate sector – student dormitories.
Rental growth in this sector slowed down to only 0.9%in 200 universities surveyed by Yardi. The average announced survey rent fell to 905 US dollars per bed, a decline of 1.4% compared to the peak of 918 US dollars in March “, since the operators have difficulty renting the remaining inventory,” says the Yardi report.
For the perspective, rental growth was 2.8%from October to July, less than half of the 5.7%in the same time before and well below the 6.9%that were seen a year earlier.
“What we see is that it falls up and down,” said Robert Bronstein, founder and CEO of Scion, one of the country's largest owners and operators in the country.
Scion has around 95,000 beds in 83 schools in 35 states, with assets of over 10 billion US dollars being managed.
Bronstein said that the lower end of the market, that is, students and parents who fought the most to afford for student apartments is now returning to the historic, cheaper rentals on the outskirts of the campus. College and parents also change the course.
“I think people say: 'Do you know what that is three years old, and it costs 30% less than a brand new building, and I would not use the whirlpool on the roof anyway. I will go with the cheaper option,” said Bronstein.
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The students, he said, are increasingly approaching with their living rooms and prefer co-working rooms and distant interviews towards golf simulators and cinemas that were anger a decade ago. High-end initiations, he said, no longer drive the occupancy. The cost savings are now of the utmost importance.
Scion plays on the middle market and mainly acquires real estate at large schools, including the University of Florida, the University of Alabama, the University of Oklahoma and the University of Mississippi as well as the Texas A & M and Clemson University.
“We were very active last year. We are very active this year. This could be the most active year,” said Bronstein.
He said that after Covid there was a shift in the investments in the direction of the large flagship – and it accelerates.
“The top public schools with 40, 50, 60,000 layers, which publish year after year of record registration growth.
“I don't think you are optimistic enough about Madison, Wisconsin or Ann Arbor, Michigan or Athens, Georgia or Gainesville, Florida,” he said.
He said there is also a acquisition advantage in the current environment of high interest rate.
“We see it that way, ok, this is a market in which we want to be. We won't be with 300 beds in it.
Bronstein said he was optimistic because there was a decline in the new development due to higher costs for construction and capital. This will increase the value of Scion's existing assets.
In his report on housing construction in 2025, Commercial Real Estate Lender Walker and Dunlop predicted a “dynamic” year for the sector.
“After a time of slow transaction volume due to macroeconomic headwind, the market is recovering because the interest rates stabilize, condemns institutional capital and enrollment at large universities continues to increase,” the report says.
It was found that the Southeasters Conference remains the most active conference for student apartments for student apartments. The Big Ten Conference is gaining dynamics because larger schools have the growth of record records.
The same shift of higher cost -effective buildings, which were stacked with bells and whistles, which Bronstein found.
“While luxury institutions have once defined the sector, the latest trend is a shift to functions, convenience and affordability,” says the report.