This is an opportune time for student housing investments in Eugene. Rene Nelson, CCIM, CRE, with Pacwest Commercial Real Estate, and Bob Nelson, real estate investment broker, with Pacwest Real Estate Investments, look at the local student housing market and opportunities for investors.
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Right now, a number of national student housing developers are interested in the Eugene market. This is the result of a few factors, primarily what’s happening with the Phil Knight Science Center, and Hayward Field. The university is going to try to transition Hayward Field to look like a European track. They’re trying to bring in some very competitive athletes, and this will look great for the University of Oregon. It is putting us back on the map.
For years our football program was at the pinnacle. Through some changes there, we’ve kind of slipped off, but we still have a high-caliber of sports program, whether it’s track and field, basketball, or women’s softball. We’re competing with all the other national schools, and that keeps us on the radar for developers.
Eugene Student Housing Investment Market
Over the years the enrollment at University of Oregon has remained relatively steady, so the Phil Knight campus will really add a huge benefit. They anticipate that’s going to add about 750 students and professors, just at the beginning.
Additional students mean additional opportunities. The national student housing developers look at our market and know that we still have a large influx of out-of-state students as well as international students that are coming to our market, and that is obviously attractive.
We really have two different dynamics with the existing housing. We’ve got the older complexes that were built in the ’60s, ’70s, and ’80s. Those are your typical, three-story, wood-frame apartment complexes. Those are filled and have a waiting list. There were also a lot of four-bedroom apartment units created in the early 2000s, in part as an answer to a restrictive parking requirement that said you had to have X number of parking spaces per unit. If you went with more bedrooms, you still only had to have so many parking spaces per unit, reducing the amount of parking you had to provide. Those properties hit a bit of a dilemma in that they didn’t have the amenity package that was provided by the most recent apartment complexes. However, there seems to be a chicken for every roost. Then you have the nicer complexes where the rents are a little higher. The brand new complexes run about $200 a bedroom higher, so not every student (or their parents!) can afford that.
“Some local developers have built some smaller complexes, and those are full. But with the changes coming with track and field and other planned improvements and expansions at the university, we’re just starting to see some pretty amazing student housing developments. Those larger national developers often bring to the table quite an amenity package. Whether it’s free tanning, or roof-top pools, or sand volleyball pits, that’s where they make the quality-of-life appeal to students. That’s what the students call it: quality of life. Mom and dad look at it and go, wow, you’re going to drain my bank account.” —Rene Nelson, CCIM, CRE, Pacwest Commercial Real Estate
It’s interesting from an investor’s standpoint. We have people that may be more concerned with the preowned, older, lower priced per unit complex because they make greater sense for a rate of return standpoint. But there are numerous opportunities for investment. If you’re considering student housing investments, call Rene Nelson at 541-912-6583.
Ask the Experts is a regular video series featuring David Moore, Equity Advantage CEO. David teams up with industry experts such as Rene Nelson, CCIM, CRE, with Pacwest Commercial Real Estate, and Bob Nelson, real estate investment broker, with Pacwest Real Estate Investments to answer questions most asked by clients about 1031 exchanges, market trends, and opportunities.