[P633]Present Value Growth Opportunities

The economy is weak and commercial mortgage capital is tight. Investors and developer who want to secure funding must find sectors of the industry that are thriving or risk being rejected by lenders. Fortunately, there are some pockets in the commercial real estate space that still offer significant growth opportunities and can still capture the interest of banks, private commercial mortgage lenders and other capital partners. Boomer housing is booming and is projected to maintain a rapid growth rate.

Student housing, for what's known as ?echo boomers? and senior housing, for rapidly aging ?baby boomers?, are huge growth drivers in the multi-family (rental) sector. Amid all the doom and gloom these two housing areas offer investors and developers real profit opportunities. College enrollment has been rising for several years now and will continue to grow. A weak job market can actually help improve this trend. When good paying jobs are hard-to-come-by and when people are being laid off, they often opt to go to school to improve their employment prospects for the future. Echo boomers, also-known-as Generation Y, number about 83 million. Demography speaking, that's a huge number, and by 2030 it is projected that there will be more than 90 million kids that have been born in the first third of the new millennium. Of these young people who graduate from high-school nearly 70% will attend collage. Add to that a large number of older Americans who will, no doubt, decide to continue or complete their education and you have a massive amount of students on the horizon. Schools typically only provide housing for about 35% of their students. The market for student apartments around higher education campuses is ripe for development. Lenders are very willing to listen to acquisition and development ideas in this fast growing sector.

The senior housing sector is also poised for a great increase in demand over the next 20 years. The last generation of seniors was staunchly opposed to moving into any type of senior housing facility. Their frame of reference was the ?nursing home? where they perceived seniors were neglected and ill-treated. The baby boomers however are much more accepting of the senior housing concept than their parents were and they have more money and better health insurance that can buy better quality care. Ten years ago less than 5% of older American would consider any type of senior or assisted living housing concept; today close to 16% are very willing to look into it. The last U.S. census tells us that the number of senior citizens will reach nearly 73 million in less than 25 years, that's more than double today's figure. Life expectancies are increasing rapidly; we can expect that one in five Americans will be over 65 by the year 2030. A rising number of seniors plus a rising market acceptance equals a monstrous increase in demand for all types of senior housing, now and well into the future.

Lenders, joint venture partners and private commercial real estate investors are being very, very selective when choosing the projects and acquisitions they fund today. Funding sources are attracted to growth markets and will back the purchase or construction of well run, high quality projects in expanding sectors. Student and senior housing are definitely booming and should continue to rapidly enlarge. Commercial real estate professionals who need financing should carefully consider entering or increasing their exposure to these markets.