While student housing faces some challenges in the COVID 19 era, one company is placing a big bet on the sector.
The W5 Group, a single-family home investment firm investing in residential real estate sectors in Europe and the United States, has launched a US student housing initiative.
In the student residences, the W5 Group is seeking equity, preferred capital or mezzanine investments of $ 20 million or more in developments and existing assets near leading universities with strong enrollment and limited competition.
W5 launches this new initiative with The Retreat in Orlando, a high-end development near the University of Central Florida’s Orlando campus. Landmark Properties will develop and operate the property, which began construction in August 2020 and is expected to be completed within 12 months.
W5 is entering the student housing market at a difficult time. Even before COVID-19, the student housing market was facing challenges. In September 2019, Trepps Manus Clancy and Catherine Liu wrote that the student housing crime rate, which was 7.36% at the time, was "well above post-crisis levels for all major property categories, including the widely studied retail sector."
COVID has caused even more problems. In a quarterly analysis of the dormitory, Reis analyst Keegan Kelly wrote so Real estate vacancies with the bed should increase from 5.2% in autumn 2019 to 7.4% in autumn 2020.
As the students returned to campus, cases rose. The New York Times dozens of colleges have seen spikes in COVID-19 at the start of classes in the past few weeks.
Kelly wrote that she expects the student housing markets to rebound once a vaccine becomes widely available. For W5, there is hope that the vaccine will be here when the Orlando retreat opens.
"The Landmark Development Team will hold the retreat ready to welcome students for the 2021-22 school year," said Raphael Sidelsky, W5's chief investment officer, in prepared remarks. "By then, we hope that social distancing requirements have eased somewhat and the global pandemic threat has subsided. If not, then our property is configured to maximize the safety of residents. Our units provide each resident with their own bedroom and bathroom and are spread across separate buildings to limit density. "