EP#106 Casey Petersen | Is Student Housing Doomed by an Enrollment Cliff? Not Exactly.

Jay Parsons (0:03)

Welcome, welcome! Coming to you from the road this week for episode number 106 of The Rent Roll, your podcast on all things rental housing, apartments, single-family rentals, build to rent, and this week, student housing. Now, I know some of you are thinking, I'm not in student housing, I'm not going to be in student housing, I'm going to change that dial. But before you do, let me pitch you on this. I'm going to make the case today that what's happening in student housing could give us some clues on where the conventional multi-filling market is heading over the next decade. And really not even just rental housing, actually, just housing more broadly, given the changes that we're seeing in demographics across the US. And obviously, demographics are changing. The college-age population in the US is going to be declining. Does that mean an enrollment cliff and doomsday for student housing first, and then down the road for conventional multifamily next? Well, not exactly. It's a more nuanced story than the doomsdayers want to admit. And again, I think that same thing is going to prove out for multifamily. I'm going to get into that in today's hot take segment of the podcast. Before we do that, we'll give a quick review of the current state of the student housing market here in the US. We'll also cover the latest headlines, as we always do, that are impacting rental housing, multifamily and SFR. And then, for today's conversation, we're going to be joined by the CEO of one of the nation's largest student housing property managers, Casey Petersen of PeakMade, and an active student housing developer as well. So let's jump into it. First, let me give a quick shout out to our headline sponsor, JPI, a leading apartment developer of the stated purpose to transform building, enhance communities and improve lives. Check them out at jpi.com. As you know, JPI is in the cutting edge of some big innovations in apartment development and construction. All right. So as always, we kick it off with a little section we like to call Here's a Chart! And we got a few charts for you this week. This segment is sponsored by Northspire. If you developed anything, you know this one. The forecast and the budget live in one spreadsheet, the draw package lives in another, and somebody on your team spends the last week every month stitching them together into a report that's already stale at the time it goes out. Northspire was built by a real estate developer to end that. One platform for budgets, forecasting, draws, scheduling, and vendors across every project you've got. Northspire has facilitated more than $500 billion of projects. northspire.com.

Okay, so we've got some charts this week covering the latest in student housing and also these enrollment trends we've been hearing about. I want to give a big tip of the cat to my friend, Arvind Sivyani, at RealPage, who put some great charts together for a recent webcast and sharing these here with permission from RealPage. So let's start with the enrollment story. Where are we seeing growth? Where are we seeing losses? We hear a lot about shrinking college age population. I'm sure you've seen those new stories and those charts on changing demographics, fewer kids, etc., therefore fewer college students. But the real story is more nuanced than those headline narratives suggest. A number of schools, as you can see from this chart, saw enrollment jump by more than 3% in the latest figures. That was led by Georgia Tech, Tennessee, Kennesaw State in Georgia, Arkansas, LSU, Ole Miss, Kentucky, Arkansas State. And on the flip side, we saw a number of campuses that did see enrollment shrinkage, led by Portland State down 2.3% year over year. Also Eastern Michigan, Pennsylvania Western, Toledo, Northern Colorado, Central Washington, Indiana State, and Buffalo State. Now, you may pick up on a theme from those lists, which is that generally speaking, brand name, big name, Power 4 schools, and big name, private schools, and others in growth areas, they're generally doing just fine, still growing.

Arben did some analysis looking at where the growth is coming in more detail. And it's not just as simple as the Power 4, to be fair. Sometimes I think we oversell, hey, it's Power 4, Power 4 It's not just that. It's regional, too.

He noted, they're generally, we're generally seeing growth in public universities and growth states, especially in the Southeast, Southwest, Texas.

But on the flip side, lesser known schools, regional schools, especially in states that are flat or down on population, well, that's where that enrollment cliff is being more felt. Arben noted that enrollment challenges are especially acute in small, private, tuition-dependent liberal arts colleges concentrated in more rural parts of the Northeast and the Midwest. So we're going to talk with our guest today, Casey Petersen, about this later. But clearly, there is a flight to quality trend happening in student housing. That so-called enrollment cliff, it's not evenly distributed across campuses across the country. Students have more options today, less competition for spots, and they're, broadly speaking, of course, and they're picking brand-name schools, as well as public universities in these growth markets. And that segment of the industry may be a better position for the long haul. I mean, we'll see that seems to be the case right now. And there's a related headwind for student housing, and that's reduced international student enrollment. RealPage shows new international enrollment fell by 17% last year, and also doctoral degree applications among international students fell by 21%.