ULI Chicago News

Meeting Summary: Investment in Niche Property Types

This is a summary of the April 28, 2016 meeting of the ULI Chicago District Council, which gathered at Jenner & Block’s Chicago office to hear an expert panel of professionals discuss investment trends in some of the hottest niche markets, including student housing, medical office and self-storage.

They explored topics that included what factors are prompting increased investment in these sectors, the leading sources of capital, some of the biggest obstacles for attracting capital, and how operators attract new capital flowing into the market.

The moderator for the session was Keith Largay, Managing Director, Real Estate Investment Banking, JLL. Panelists were Robert Bronstein, President, The Scion Group LLC; Lucy Fletcher, Managing Director, International Capital Group & Americas Capital Markets, JLL- Capital Markets; and Chris Merrill, Co-Founder, President & CEO, Harrison Street Real Estate Capital.

The Scion Group and Harrison Street Real Estate Capital are by far the two largest private owners of student housing, but for Scion, entry into the niche was “accidental,” said Robert Bronstein.

As a commercial real estate broker in Chicago some 18 years ago, Bronstein was involved in two student housing transactions with the School of the Art Institute, one at State and Madison and the other at State and Randolph.

“Seeing that student housing transform the School of the Art Institute from a very small, regional presence to a school that could draw nationally and internationally is what turned me on to (the student housing niche),” he recalled.

Without capital or a background in acquisitions or operations, Scion began as an advisory business. Now, acting as an investor and an operator, the company has done work for 170 schools in the United States and several other countries. With offices in Chicago, Southern California and Toronto, its 25 to 30 engagements annually range from feasibility analyses to running student housing for the University of Nevada, Las Vegas on an outsourced basis, Bronstein said.

When Merrill launched Harrison Street Real Estate Capital a little over a decade ago, the core strategy was creating a long-term business model that was not tied to timing economic cycles. Reflecting on demographic trends, his firm targeted education, healthcare and storage themes, and especially zeroed in on student housing as its largest investment.

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