How active is the Houston student housing market close to Huston University? There are some reports that a lot of investor money is rushing to the Texas student housing market, which will create huge supply in the next 2-3 years. Is that true?
Answers
I am not especially familiar with the student housing market in Houston as I live and practice in NY. However, for student housing market assessment, you need to look at where the largest universities are, their growth and existing student housing stock. In Texas, I would think that Austin, home of the University of Texas, would be the strongest market. I would think Dallas and Fort Worth next given SMU and other colleges there. Houston is based on the University of Houston which is not of the same pedigree or state financial support. But, more research should be conducted for a proper conclusion.
While I am generally familiar with the Houston market, the vantage point comes from having worked on a recapitalization for a Houston office building. I learned that, while the market is expected to improve, the turning point has not yet been reached. I work with experts to whom I would refer you.
I cannot speak to the University of Houston market specifically (though I myself graduated from its law school many years ago now), but this is the situation generally with student housing in the U.S.: I am going to paraphrase what a very knowledgeable lender in the U.S. said this very day on a panel at a conference I am attending--the lender said he would "kick out" (i.e. require the loan to be removed) any student housing loan from any securitized pool in which he invested unless it was "on campus at a major university" because there is way too much capital flooding into the sector and because the fundamentals in the sector are not good. So be very careful.