Austin-based student housing developer Parallel has broken ground on its second development in College Station, the home of Texas A&M University, the largest university in the Lone Star State.
Parallel’s 750-bed development at 401 First Street will offer studio, one- and two-bedroom apartments, and is slated to open in Fall 2024, according to a press release.
Parallel’s first student housing development in College Station, the 802-bed Reve will feature studio, one, two, three, four, five, and six bedrooms and is scheduled to open in August 2023. That development will be managed by Houston-based Asset Living.
The groundbreaking comes on the heels of the impending $13 billion sale of Austin-based American Campus Communities to Blackstone, announced in April 2022.
ACC is the largest publicly traded student housing owner and developer in the United States, and owns five student housing developments in College Station.
“We like the student housing play a lot, there’s an undersupply. The occupancies do not have the rent growth of multifamily, but there’s no downside either. There’s a reason Blackstone is buying ACC and sovereigns are interested in student housing,” Alexander Goldfarb, managing director and senior research analyst at Piper Sandler told The Real Deal when the ACC sale was announced.
Typically, student housing averages three-to-four percent rent growth and three percent NOI
(net operating income) growth, Goldfarb said. But student housing income rarely has a significant decline in a recession, he added, making the sector increasingly attractive now,
Cities with flagship state universities typically have a shortage of dorms, due to the limited space available for development, making it an asset class attractive to institutional investors.
Of course, like any investment, student housing is not without risks. California-based Nelson Partners recently settled a lawsuit with investors at its former Skyloft development near the University of Texas at Austin for $50 million.
Parallel executives did not return a call for comment. The cost of the project was not disclosed.
Parallel’s partners on the 401 First development include BOKA Partners, Rogers O Brien Construction, Alison Royal Interiors, RLG Engineers, Mitchell and Morgan Civil Engineering, V3 Engineers, Infinisys and SMR Landscape, according to the release.