Bigger, sometimes, is better.
In a time when enrollment trends point to future uncertainty in higher education, some housing firms prefer to stay near large universities.
One of those owners is Champion Real Estate Co., a Santa Monica, California-based real estate firm founded by Bob Champion in 1987. Over the past 20 years, the company has acquired core-plus, value-add and opportunistic multifamily, retail, office, student housing and mixed-use properties.
Champion owns about 4,000 beds in 15 student housing properties at eight universities. With two exceptions, all of those properties are near big schools.
The two exceptions are located in Southern California with “great supply-demand fundamentals,” said Garrett Champion, senior vice president and partner at Champion Real Estate. “But we typically are looking to the tier-one Power Five conferences.”
Champion, a long-term holder, typically pursues and renovates older properties. That strategy seems to be working.
“We are seeing very strong rent growth in most of the markets we're in,” Champion said.
Here, Champion talks with Multifamily Dive about a rebound in student housing sales and pain points in the sector.
This interview has been edited for brevity and clarity.
MULTIFAMILY DIVE: How has the student housing sales market held up as interest rates have risen over the last two years?
GARRETT CHAMPION: The sales market is obviously considerably down from where it was years ago. But capital is absolutely attracted to student housing in particular, because of the fundamentals and the rent growth that has occurred and is continuing to occur. It allows buyers to forecast positive leverage quicker than what they're seeing in multifamily.
Do you expect the sales market to pick up this year?
I don't think this year is going to rebound back to what we saw in 2021 or the first half of 2022. But I do think it is going to rebound from 2023. We'll see more activity than we did last year, but I think it's still going to be very patient capital — being very selective with the deals that they choose.
With your portfolio of older buildings, you aren’t providing new, over-the-top student amenities. How do you differentiate yourself?
We're hyper-focused on how we make the in-unit living experience the best it can be. We have found that it's got to be clean. When I say clean, that's in the literal sense.
But we also like to pick finishes and furniture options that really just make it feel like an inviting home. So that way, when they're living in their unit, they're having the best experience that they can. And part of that, again, is providing all the furniture and TVs. We actually provide all the utilities as well.
In student housing, often someone will come in and rent just the bedroom, not the unit. They might be living with someone they don't know.
How do you make that process easier?
One of the biggest pain points that students and their parents have is who is going to put their name on the utility account, and then that person has to chase the other ones living in the unit each month to get reimbursed for their share. So we've solved that pain point by providing all the utilities.
We call it a white-glove student housing experience. Basically, you bring your suitcase, and we'll have everything else ready for you.
How did your company perform through the COVID-19 lockdowns?
Our experience during COVID-19 was that it performed very well. In the fall of 2020, occupancy had dipped a little bit, let's say 5%, but it rebounded by the spring.
We found that our students, including their parents, for whatever reason, wanted to be at school with their friends. They did not want to be cooped up at home with mom and dad. And mom and dad didn't want them going out and bringing COVID back into the house.
We found that students were very eager to get on campus even though there were online classes at the time. They were very eager to get back to campus for the social aspect of school.
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