Colleges on Limited Budgets Brace for Population Growth

The following article was recently published by the Chronicle of Higher Education. Student Housing Investors may want to explore some of the markets mentioned in this article as future acquisition targets...

Thirty-eight students graduated in May from Georgia Gwinnett College, which opened in 2006. State lawmakers expect that, in five years, the institution will have an enrollment of about 10,000, as the state's college-going population skyrockets.

The college-age population across the entire South Atlantic is growing rapidly, and having a new four-year college with lots of room to expand is highly unusual. Most states are struggling to support their often-overcrowded public colleges, let alone paying to open new ones.

More students than ever applied to South Atlantic colleges this year, at a time when institutions are becoming more expensive and more selective, shifting pressure to community colleges with open-door admissions policies.

Read More.

Obama's Ambitious Plan for Community Colleges Raises Hopes and Questions

The former pastry chef studying for a fresh start as a clinical therapist. The professor who gets so many calls from laid-off autoworkers he can recite them by heart. The college president coping with 300- person waiting lists.

Their struggles framed the backdrop on Tuesday as President Obama visited Macomb Community College here, outside Detroit, to propose an unprecedented federal infusion of dollars for two-year colleges.

“All too often, community colleges are treated like the stepchild of the higher-education system,” Mr. Obama said. “They’re an afterthought, if they’re thought of at all.”

Read more here...

Small GDP Contraction Signals the Recession is Winding Down

• During the second quarter, gross domestic product (GDP) beat consensus expectations, declining at a far more modest rate than in preceding quarters. The economy is still contracting; however, the recent data suggest that the recession is nearing an end and that a recovery could begin to take shape in the coming months. GDP fell at an annualized rate of 1 percent in the second quarter, compared to annualized declines of 6.4 percent in the first quarter and 5.5 percent in the fourth quarter of 2008. While the more subdued decline is a welcome sign, the depth of the downturn has been significant; GDP has now contracted for four consecutive quarters for the first time since the government started tracking the data in 1947.


• The economic stimulus has begun to kick in, limiting the recent decline in GDP and likely supporting modest growth in the coming quarters. Government spending increased by an annualized rate of 5.6 percent in the second quarter, compared to a 2.6 percent drop in the first quarter.


• In contrast to the acceleration of government spending, consumers are holding back. Personal consumption expenditures, which account for approximately two-thirds of GDP, fell at an annualized rate of 1.2 percent in the second quarter, after ticking slightly higher in the first three months of the year. Severe job losses and persistent weakness in the housing market have weakened consumer demand, which will likely result in a slower recovery than in past cycles. A “U-shaped” recovery, or one where the economy comes out of a recession with an extended period of low growth before posting solid gains, is increasingly likely.


• In response to softer consumer demand, businesses are scaling back inventory levels. While a reduction in inventories is a drag on GDP, it also can provide fuel for a recovery. When spending begins to gain momentum, businesses will have to crank up production, rather than pull from existing stockpiles of goods, to meet the new demand. The industrial sector will be the primary commercial real estate sector to benefit from increased production.


• Reduced consumer demand is weighing on retailers. During the first six months of 2009, negative net absorption of retail space topped 30 million square feet, and vacancy increased 110 basis points to 9.5 percent. With demand softening, property owners have dropped rents and offered greater concessions, resulting in decreased investment activity and rising cap rates, particularly among multi-tenant properties.