August 29, 2019
Student housing linked to universities with elite football programs attract the best pricing and greatest demand from investors, according to the latest analysis from CBRE.
The Los Angeles-based brokerage reports investors are drawn by the large and consistent enrollments, as well as the stable cash flows that these properties offer.
College football conferences are strongly correlated with student housing capitalization rates, a valuation measure used in commercial real estate to indicate investor interest. CBRE analysis finds that student housing at colleges with elite football programs trade at lower cap rates than properties serving colleges with lesser-quality football programs.
CBRE’s Jaclyn Fitts says, “Football works as a very effective marketing tool for universities, and creates value for student housing properties. The strong football programs in Division I schools, and particularly in the ‘Power Five’ conferences, create national branding and prestige. In turn, these ‘football schools’ recruit more students, as evidenced by the spike in applications following the NCAA National Championship game. These characteristics give investors confidence in the sustained superior performance of the student housing assets serving ‘football schools’.”
Power Five universities’ (Atlantic Coast Conference, Big Ten Conference, Big 12 Conference, Pac-12 Conference, Southeastern Conference), student housing acquisitions had an average cap rate of 5.40% in H1 2019, 43 basis points lower than cap rates for properties serving schools with non-Division 1 programs.
Examples of non-Power Five schools with strong football programs that are gaining significant national attention include:
- Boise State University
- San Diego State University
- University of Central Florida
- University of Cincinnati
- University of Houston
- University of Memphis
- University of South Florida
*Pictured The Univ. of California Hastings College of the Law’s campus housing, academic and mixed-use projects at its San Francisco campus.
For comments, questions or concerns, please contact Dennis Kaiser