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Will There Be An Oversupply Of Product In Student Housing By: Justin Coleman

October 20, 2014

 

With the continual increase in product being brought online in Student Housing, the billion dollar question remains of, “Is there going to be an oversupply of product in the near future?”  Depending upon who you ask you may receive very different viewpoints and outlooks, but ultimately with the industry hitting numbers in new supply that have never been hit before, no one truly knows the answer to this question.

Regardless of whether the market will absorb the new product coming online, I am most interested to see what is going to happen to the established products.  It seems like all Student Housing new constructions are being built with every single bell and whistle in mind when it comes to apartment interiors and community amenities.  These new communities are essentially being tailored to the exact needs of the students and can even be viewed as a modernization of the product that is in the area.

Does this mean that if I am a community built 10-15 years ago and I do not have the ability to offer the interiors and amenities of the new product, I do not have a fighting chance to fill up?  It must be common sense to think that if I am a student and I have the choice to live at the high end product or the more modest established product, I will always choose the high end option right?

This is an interesting question to pose, because it is rare to see a new construction being built not as a premium high end product with tons of amenities, but this raises an appealing point.  As I heard it phrased at Interface in Austin this year, “Every new construction is like delivering a Ritz Carlton to the market; what about the Marriots, the Hiltons, the Sheratons, etc.?”  Surely not every single student currently attending college is looking for the same high end features that every new construction community is seemingly offering right?

My point in this passage is to raise questions that ultimately there can only be opinionated answers for, as the viewpoints may differ from college town to college town.  Is the Student Housing industry going to be one in which now in order to be competitive from a supplier standpoint, you must have the laundry list of amenities?  Or, is the Student Housing industry going to be one in which all suppliers will thrive, because the diversified demand is there across the board and all communities will fill up every year?  Only time will tell, but I think it will be interesting seeing what pans out in the next year or two.

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