Why Adam America is entering the student housing market: An interview with CEO David Brickman

Adam America Real Estate launched its first project in 2009, at the depths of the Great Recession. Although it wasn't an ideal time to start building housing, the New York-based company carved out a niche in apartments and condominiums over the following decade.

About a decade later, however, the company expanded into a new sector: student housing. "We've really put a lot of effort into student housing over the last five years," CEO David Brickman told Multifamily Dive. "Historically, we've been more focused on traditional multifamily. We just view student housing as a subset of multifamily."

During this period, Adam America has completed several projects: Terrazul in Sweetwater, Florida, serving Florida International University students, with 1,200 beds; The Hudson & Hudson Suites in Albany, New York, serving University at Albany students, with 690 beds; and Olive & Wooster in New Haven, Connecticut, with 299 units and 557 beds.

According to a press release obtained by Multifamily Dive, the Olive & Wooster project serving Yale University has 172 fully furnished beds designed for students and is the company's first student housing project. Additionally, Adam America is planning a 30-story student housing tower in the West Campus area of Austin, Texas, with over 1,000 beds, near the University of Texas at Austin.

At a time when traditional apartment turnover is sluggish, Brickman says student housing provides Adam America with a growth driver.

"Our traditional apartments don't turn over as much as they used to, which creates challenges," Brickman said. "In student housing, there's inherent turnover. Yes, there are renewals, but every year new students come in. That drives rent growth during a period when rent growth is more difficult in the traditional portfolio."

Here, Brickman discusses with Multifamily Dive how he chooses partner universities, financing for student projects, and the amenities arms race.

This interview has been edited for brevity and clarity.

MULTIFAMILY DIVE: Where does student housing fit into your portfolio?

DAVID BRICKMAN: We view student housing as part of the company's continued evolution into more specialized housing categories within the residential sector. We have traditional multifamily, we're building build-to-rent projects, and we're building student housing. We're trying to position ourselves in the broader residential space around areas with strong demand drivers.

So, adding student housing to our broader residential portfolio makes sense. But the trend we see in student housing is that, from an investment perspective, there are definitely winners and losers among universities. We believe that top-tier universities—those with supply constraints—will be stronger than ever from an investment standpoint.

Millennials are well past college age. How do you adapt to the smaller demographic group entering college?

We are definitely more selective in choosing schools. In student housing, just like in multifamily, supply and demand drive our business plan. So, what will drive demand for student housing? Clearly, it's demand for the school and its enrollment growth. Both are essential, and we are screening very, very carefully. Yes, on a broader level, the national college-age population is expected to decline, which is exactly why we are being more selective.

How are you doing that?

We're making strategic decisions about which states and which schools will truly benefit. Not every state will see a decline in its college-age population. In fact, some states are expected to see increases. So we're focusing on those states.

The key is understanding supply and demand. We believe some schools will benefit more, and we also think there are certain schools in certain states that we might pass on.

Are you looking for larger schools?

We do focus on flagship state universities, for reasons similar to why other investors focus on them. We obviously look at application growth at the university, but it's not just application growth. We have to dig into the university's future growth plans and how they think enrollment will grow. So, there are many variables involved in deciding where to position ourselves.

Is financing student projects easier than financing multifamily construction?

I think yes. Obviously, the economics and yields have to work, but there are specific strategies around student housing and capital that is specifically dedicated to students. The project has to be at the right university, in the right location, close to campus, and with the right sponsorship team.

On the equity side, we think there is targeted capital. On the debt side, there is ample liquidity for both student housing and traditional multifamily.

One characteristic of student housing we think about is that it's not highly correlated with U.S. GDP growth. The success of a student project doesn't depend on U.S. GDP growth, so this low correlation feels very good in the current environment.

Has the amenities arms race reached a truce at top schools?

The answer is it depends. Among top assets chasing the highest rents in the market, there is still an amenities arms race. Those amenities exist in those assets, so any new project hoping to compete with them has to compete on amenities.

But at the same time, location matters as much as ever, if not more. At some point, just like with universities themselves, affordability is king. If you can offer high-quality student housing in a great location, possibly at a lower price, there are certainly students willing to give up top-tier amenities for the right price. So it's a balance, and it really depends on the product type, the university, and student expectations.