major universities in my market

17 Replies

I am trying to determine the "economic anchor" of my market. An economic anchor is something that supports the local economy and is not going anywhere even during an economic downturn.

Question: How many students have to be enrolled in a university for that university to be considered an economic anchor? Or is there another factor (besides proximity) that needs to be considered before a university can be considered a major university and economic anchor?

Thank you,

Jason

@Jason Ma I'm not sure this answers your question but I would recommend looking at the growth of the university.

I invest almost exclusively in student rentals in Columbia, SC and the University of South Carolina is the primary driver of activity in the downtown market. The reason that I (and a lot of others) feel comfortable with increased competition within the tenant base is the expansion trajectory of the college. The enrollment has probably gone up ~50% in the last 20 years.

Some schools are limiting the amount of students and are making it harder to get in. Other schools are allowing more students in and expanding. I'd rather invest in a market with the latter. 

@Jason Ma There is no specific # where a university goes from minor to major. What folks are looking for is a compelling reason why an economic anchor will not/can not move quickly to a new market. 

E.g. Disneyland will find it very hard to move from Orlando no matter how many incentives another municipality offers them. 

Similarly, in your case if a university is famous or old (but growing in economic clout due to students, investments, etc) then that can be considered an "economic" anchor. 

Nonetheless, you still need to do market research. Nothing else matters if that isn't working in your favor.

Originally posted by @Will Gaston :

@Jason Ma I'm not sure this answers your question but I would recommend looking at the growth of the university.

I invest almost exclusively in student rentals in Columbia, SC and the University of South Carolina is the primary driver of activity in the downtown market. The reason that I (and a lot of others) feel comfortable with increased competition within the tenant base is the expansion trajectory of the college. The enrollment has probably gone up ~50% in the last 20 years.

Some schools are limiting the amount of students and are making it harder to get in. Other schools are allowing more students in and expanding. I'd rather invest in a market with the latter. 

Thank you. Are the enrollment trends available to the public even if it is a private university?

Originally posted by @Andrew R. Lucas :

@Jason Ma try calling the Chamber of Commerce and ask them?  If the University is a driver in town they would know.  

 Thank you great idea. Have you tried doing this? Sometimes it is difficult to get government agencies to call you back

Originally posted by @Omar Khan :

@Jason Ma There is no specific # where a university goes from minor to major. What folks are looking for is a compelling reason why an economic anchor will not/can not move quickly to a new market. 

E.g. Disneyland will find it very hard to move from Orlando no matter how many incentives another municipality offers them. 

Similarly, in your case if a university is famous or old (but growing in economic clout due to students, investments, etc) then that can be considered an "economic" anchor. 

Nonetheless, you still need to do market research. Nothing else matters if that isn't working in your favor.

Thank you for the clarification. It is funny that you mentioned Disney. One of the markets I am considering is right next to Disneyworld. However, I thought that I should not consider it as an economic anchor because it is not a university , hospital, or military manufacturer. How would you determine is growing in "economic clout"and should be considered as an economic anchor? 

@Jason Ma Anything can be an economic anchor. E.g. military bases, government offices, steel mills, manufacturing, knowledge-based workers (Silicon Valley). 

It's all dependent on economic clout and power.

Originally posted by @Omar Khan :

@Jason Ma Anything can be an economic anchor. E.g. military bases, government offices, steel mills, manufacturing, knowledge-based workers (Silicon Valley). 

It's all dependent on economic clout and power.

 Thank you. But how do you determine an economic anchor? Like what kind of analysis do you do? What database do you use to determine an economic anchor?

Originally posted by @Jason Ma:
Originally posted by @Omar Khan:

@Jason Ma Anything can be an economic anchor. E.g. military bases, government offices, steel mills, manufacturing, knowledge-based workers (Silicon Valley). 

It's all dependent on economic clout and power.

 Thank you. But how do you determine an economic anchor? Like what kind of analysis do you do? What database do you use to determine an economic anchor?

Not using any database for the time being.

This is an art not a science (for us).

Economic anchor is any powerful economic unit/industry that drives/major effects on the local economy. E.g. Amazon HQ2 would become an economic anchor for whatever MSA they choose to locate to. 

Determining the exact economic impact down to the $ will never be a precise calculation i.e. economic models give you a range but not a precise answer.

Chambers are usually run and supported by local businesses.  They are or should be working for you as a business in their region.  Simply let them know that you are researching the market and the university's impact.  They should be equipped to answer that.  Good luck!


Originally posted by @Jason Ma:
Originally posted by @Andrew R. Lucas:

@Jason Ma try calling the Chamber of Commerce and ask them?  If the University is a driver in town they would know.  

 Thank you great idea. Have you tried doing this? Sometimes it is difficult to get government agencies to call you back

Originally posted by @Andrew R. Lucas :
Chambers are usually run and supported by local businesses.  They are or should be working for you as a business in their region.  Simply let them know that you are researching the market and the university's impact.  They should be equipped to answer that.  Good luck!


Originally posted by @Jason Ma:
Originally posted by @Andrew R. Lucas:

@Jason Ma try calling the Chamber of Commerce and ask them?  If the University is a driver in town they would know.  

 Thank you great idea. Have you tried doing this? Sometimes it is difficult to get government agencies to call you back

 Thank you will do this week!

Originally posted by @Omar Khan :
Originally posted by @Jason Ma:
Originally posted by @Omar Khan:

@Jason Ma Anything can be an economic anchor. E.g. military bases, government offices, steel mills, manufacturing, knowledge-based workers (Silicon Valley). 

It's all dependent on economic clout and power.

 Thank you. But how do you determine an economic anchor? Like what kind of analysis do you do? What database do you use to determine an economic anchor?

Not using any database for the time being.

This is an art not a science (for us).

Economic anchor is any powerful economic unit/industry that drives/major effects on the local economy. E.g. Amazon HQ2 would become an economic anchor for whatever MSA they choose to locate to. 

Determining the exact economic impact down to the $ will never be a precise calculation i.e. economic models give you a range but not a precise answer.

 Thank you. Great tips !!! Where do you normally start researching the economic clout players in a given area then since you do not use a database?

@Jason Ma Broker reports (they leverage and pay for databases), market research (online sources, personal network) and conversations with other investors/lenders/brokers/property managers.

Originally posted by @Omar Khan :

@Jason Ma Broker reports (they leverage and pay for databases), market research (online sources, personal network) and conversations with other investors/lenders/brokers/property managers.

 Omar, what is your favorite online source to use to research economic players/makeup of a market ?

BLS, Census data

City-data.com

Zipwho.com

Honestly, I just send an email to my broker contacts and they send me their pretty-looking reports with all the data I need. It's usually better quality and in a format that I've become used to seeing.

Originally posted by @Omar Khan :

BLS, Census data

City-data.com

Zipwho.com

Honestly, I just send an email to my broker contacts and they send me their pretty-looking reports with all the data I need. It's usually better quality and in a format that I've become used to seeing.

 Thank you again

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

We hate spam just as much as you