Student housing is one "sexy" CRE food group

Dorothy Jackman is convinced she works in the sexiest of commercial real estate sectors: Student housing.

“Hands down, it’s the sexiest of all the commercial real estate food groups,” says Jackman, an executive managing director with commercial real estate brokerage firm Colliers International, who runs the firm’s national student housing practice from Tampa.

“It’s housing kids at one of the most formidable times of their lives, maybe the first time they’ve ever been away from home,” says Jackman, who’s been involved with student housing for the past quarter century.

“It’s making memories that in many cases last forever,” adds Jackman, who has witnessed the industry proliferate into more than 400,000 beds nationwide and transform from offering sometimes slummy lofts and dilapidated dorms into “five-star resorts” with amenities to rival luxury hotels.

“And for parents, too, student housing has a lot of important meaning. So I take it very seriously.”

Since starting in student housing in Gainesville as a property manager with Apartment Hunters in 1995 — just as the first wave of purpose-built student housing was being delivered at the University of Florida — Jackman has become one of a select group of industry gurus.

Along the way, she’s also helped educate a generation of lenders, developers, industry groups and others as to the nuances of the product type and been part of a nationwide transformation and acceptance of the product.

“When I got in the business, no one understood student housing. They thought it was ‘Animal House,’” Jackman says. “And it used to be, somewhat. A typical property would be a three-story walk up with a single big swimming pool as the only amenity.

“It was a niche business. But it took some time for everyone to understand that student housing was very different from most multifamily. It operates on a whole different business model.”

Jackman recalls that when the National Multifamily Housing Council (NMHC) began the first of two major annual industry conferences more than a dozen years ago, she would be one of only about 50 attendees.

“We sought out experts in formulating the student housing conference and turned right away to Dorothy,” says Doug Bibby, president of the NMHC. “She’s one of the Top Three producers in the industry, maybe the top producer. She’s smart, full of energy, a very positive person and very good at what she does. I think very highly of her.”

And when France Publications Inc. wanted to create a full-color magazine in 2004, it turned to Jackman for a database and ideas on how to launch it.

But while the industry has transformed around her, what has remained constant are the deals Jackman has completed. In 2016, for instance, she and a team of seven other brokers and support staff did 20 transactions.

That execution is why Colliers International wooed her away from competitor Marcus & Millichap eight years ago, to create a national student housing practice.

“I like the culture here,” Jackman says of Colliers. “I’ve always felt that you don’t have to help me in my business, but just don’t hurt me in my business. Colliers doesn’t.”

To repay that latitude, Jackman has continued to notch deal after deal. Last month, she sold a pair of student housing towers containing more than 440 beds in Ann Arbor, Michigan, for a seller she’d been cultivating for seven years.

Though the total price hasn’t been revealed, Zaragon Place is believed to have traded for around $100 million.

In many ways, the University of Michigan complex is emblematic of a macroeconomic shift in student housing that Jackman has witnessed throughout her career.

“No one understood, nor could have predicted, what the industry would become,” she says. “Today, investors from countries around the world come to U.S. student housing. Now it’s the prom queen. No more ‘Animal House. And that’s because it’s fun, it’s exciting, it’s challenging and it’s lucrative.

“Today, some of these properties are like five-star hotels, with rooftop decks and resort-style pools and amenities galore,” Jackman says.

She sees further changes to the industry taking place, too. Public/private partnerships are becoming more prevalent as publicly funded institutions shy away from development, and schools are increasingly looking toward urban infill deals to mitigate a shortage of units that plague many places of higher education.

“Student housing today is morphing into a new product type, one that’s more resilient,” Jackman says. “More developers are doing unit mixes to respond to market demand and the market as a whole.

“They’re smart enough to know that you have to do more than build to a single use, because things change,” she adds. “Today, it’s all about the longevity of the asset.”

That, in turn, has pushed many developers to build more upscale student housing, in part because those units can be more easily converted to market-rate apartments, if need be, and also because studies have shown that students will take better care of a more upscale unit than one that’s downtrodden.

For Jackman, too, change prevails.

Over the next three years, she plans to transition into more of an advisory role. She hopes to mentor more and travel less.

“The best thing about having done this for so many years is that now I’ve earned a reputation,” she says. “There’s immediate credibility because people know me, and what we’ve built. There’s trust. I can launch a career pretty quickly. That’s my legacy, and I’m happy about that.”

She thinks the future of student housing — regardless of any changes in design or amenity packages — also is bright. As evidence, she notes that the conference that first drew around 50 attendees has grown to more than 1,000 at a clip.

“It’s a really good time in the industry right now,” Jackman says. “It’s largely recession resilient, too, because when the larger economy turns down people go back to school. As such, student housing is one of the last (commercial real estate) food groups to suffer and one of the first to recover.”