Binghamton Student Housing Market

Much Promised None Delivered!

The recent announcement of the 20 Hawley Street construction delay is yet another disappointment in redevelopment of Downtown Binghamton. This comes shortly after the tragic fire that took the former Midtown Mall at 83 Court Street off its schedule to be open to students for housing by August of this year.

The Impact:

In the case of 20 Hawley it has been reported that more than 200 students had signed leases with the Management and now will be scrambling to find sufficient housing. Downtown student housing has been at a premium, hence the push to new development, and the likelihood of finding apartments available is slim. ReRent Property Management is the leading firm to place students:

The alternative to Downtown living is the Westside and Southside of Binghamton as well as Vestal. While Vestal will always be desirable to professionals and students alike, the delay in the projects will stave off the inevitable collapse of the Westside and Southside Binghamton student rental markets. There is no doubt the general student population prefers the Downtown living experience. As these housing projects open along with the several other proposed buildings to be redeveloped it will not lead to over supply and vacancy in Downtown but a competitive market that may see a little rent compression at worst. The demand for student housing Downtown will only grow as activity increases and the current dismal Downtown landscape flourishes with new investment. Unfortunately for the neighborhoods outside Downtown will be stuck with competing for what’s left and quality will reign with the balance of the market vacant and heading for foreclosure. Sadly the only buyers of these depressed properties will be slumlords further diminishing the value of the local real estate market.

The recent sales data, although slim, as there are very few transactions, reflect the future value expectation and risk of the student housing market. Based on cap rates which is a very simple but widely used metric for valuing property, in order to close a sale buyers will be looking at a 15%+ return for a neighborhood and +/-14% in the Downtown area. This against a previously accepted 10% benchmark for either housing. The absolute numbers reflect the lack of demand in the market and the spread reflects the risk. Stringent lending standards also contribute to the anemic activity.

There are many aspects of the student housing situation in Binghamton, both positive and negative, we will discuss other factors in blogs to come.