Choosing the right market shouldn’t be based on a hunch

In a city that’s home to two major universities and college, student housing is an attractive investment opportunity. Kitchener-Waterloo has a vibrant student population. Wilfrid Laurier University, the University of Waterloo and Conestoga College combined attract more than 41,000 students to the region.

For decades there just wasn’t enough housing. The area was ripe for development. The problem has now become over-development.

Unbridled enthusiasm led to the building of thousands of new units. Many of those units are in danger of sitting empty or at the very least renting for reduced rents. The Waterloo Region Record is reporting that the oversupply is currently sitting at 1200 beds. With construction still underway, and all three educational institutions reporting that they expect very low growth in foreseeable future, the surplus in supply is expected to grow to more than 8000 beds.

One building is already in a power of sale position. Others have had difficulty filling units. It’s questionable if non-students will be attracted to these units configured to specifically meet student needs – some with as many as five bedrooms.

Avoiding a bad investment

Student housing is still an area of opportunity, just not in Kitchener-Waterloo market at this time. Knowing markets and the opportunities they present for certain build types is the key is to avoiding critical mistakes before the project even begins. MarshallZehr can make a difference.

Having working on hundreds of developments, we have the experience of recognizing the risks and identifying the pitfalls that can derail a project. We take the critical step to closely examine the proposed development to understand the risks and returns for our investors and our developers. Our recommendations and plans to mitigate risk are based on careful research.

Would we have recommended a student development project in Waterloo? Not in the last 3 years as we have felt the market was overbuilt with this product type. For example

  • We examine the current market to understand if there’s a need and what the competition is
  • A review of building permits and projects in development to determine if the window of opportunity has been missed or if competition will be coming online
  • An understanding of local bylaws and development requirements give us a clear picture of the potential for road blocks or delays
  • Understanding the “sales pitch” of how competitors were selling units and obtaining the capital necessary to complete their projects

If you’re interesting in making smart decisions on where you invest your resources, please contact the MarshallZehr team to learn how we can help.