Nearly Half of Student Housing Investment for Properties Serving “Power Five” Football Schools

Student housing linked to universities with elite football programs attract the best pricing and greatest demand from investors, drawn by the large and consistent enrollments, as well as the stable cash flows that these properties offer, according to the latest analysis from CBRE.

College football conferences are strongly correlated with student housing capitalization rates?—a valuation measure used in commercial real estate to indicate investor interest (the lower the cap rate, the greater the appeal and value). 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.

“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’,” said Jaclyn Fitts, CBRE’s director of National Student Housing.

Power Five Conferences Draw Most Capital

At the NCAA’s 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. Power Five universities also captured the majority of total student housing investment volume, with nearly half of all transactions in H1 2019.

Strong demand from students for limited spaces at the main campuses of large public universities—locations with leading sports teams and offering vibrant downtown areas—is leading to the emergence of new destinations in satellite campuses.

“The power of football to attract students, secure stable or upward enrollment trends, and enhance national recognition is spreading beyond the elite football conferences. Investors are looking at student housing serving Division 1 schools that are not Power Five conference members; these universities benefit from strong student growth like many flagship universities while offering higher cap rates,” added Ms. Fitts.

Examples of non-Power Five schools with strong football programs that are gaining significant national attention, along with rapidly growing enrollments, and may be of interest to commercial real estate investors 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

About CBRE Group, Inc.

CBRE Group, Inc. (NYSE: CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2018 revenue). The company has more than 90,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 480 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.