Peripheral and secondary markets draw REIT focus

Many residential real estate investment trusts are expanding beyond the core markets as they search for opportunities.

Strong fundamentals, rising rents and favorable construction costs are all contributing to a booming multifamily market, according to GlobeSt.com. One area REITs are expanding into is on-campus student housing. A growing number of schools are looking into or already pursuing privatized student housing, including public institutions.

This creates an opportunity for student housing REITs, and possibly for rental property management firms as well. One executive noted that this trend is becoming mainstream as schools seek to improve the quality and cost-efficiency of their housing.

In the meantime, apartment REITs are anticipating a release of pent-up demand. While they remain uncertain exactly when this will take place, they are aware that many young adults are living at home and delaying household formation. Analysts note they will move out eventually. When they do so is likely to be dictated by economic factors such as employment and income levels. Some REITs and managers are focusing on the demand from that demographic.