Student housing market: When will school be back in session?

Compared to the broader multifamily market, the student housing debt submarket has consistently underperformed — posting higher-than-average delinquency and special servicing rates, reported Trepp in its Student Housing Multifamily Report.

The submarket’s performance has only worsened in recent years due to overbuilding and high competition causing an “amenity arms race,” making some properties obsolete only 10 years after their construction. And that was before a global pandemic forced universities to close.

“With the COVID-19 outbreak, the student housing sector is now facing even more challenges, as off-campus owners and operators grapple with canceled in-person classes, forcing students to vacate dorms and apartments and move back home with no clear plans of return,” said Kelvin Lin, Trepp research analyst. “This raises doubts on whether owners will be able to make timely payments, further accentuating existing concerns on the sector’s short-term vi