Fall Student Housing Occupancy, Rent Growth Solid

The fall 2022 student housing report card from Yardi Matrix showed an impressive 96.6 percent of bedrooms filled with 4.1% rent growth.

Elevated investment activity continues despite rising interest rates, and the new-supply pipeline is robust, Yardi added.

Its new quarterly National Student Housing Report issued this week based on its tracked Yardi 200 universities showed that the pace of preleasing “was faster for selective universities with higher enrollment. But positive performance was widespread among university types across the country.

Twelve universities had double-digit growth in pre-leasing levels compared to September 2021 with Washington State University (18.9 percent growth) and the University of Houston (16.4 percent) topping the list.

“While student housing rent growth is starting to decelerate, there is still a significant spread between student housing and multifamily rents, which could support continued growth over the next couple of years,” according to the report. “The impact of multifamily rent trends on student housing will be stronger in university areas with a prominent shadow market, given the availability of options within a close radius.”

In-Person College Experience Invaluable

Senior vice president James Birkey with JLL’s Education practice, tells GlobeSt.com that “reports of the death of in-person education are greatly exaggerated.

“To the contrary, it’s clear that students—and parents—are acutely aware of the value of the in-person experience coming out of COVID-19. There is complexity in how that plays out on the ground, but it’s a fair generality that is influencing student housing occupancy on- and off-campus.

“While overall national enrollment statistics are below-peak, many brand-forward institutions like the University of Southern California and the University of Washington are already enrolled at full capacity again.

Senior Director Teddy Leatherman with JLL’s Capital Markets group, tells GlobeSt.com that in fall 2023 pre-leasing, “nearly every market we are active in is pre-leasing faster than last year with significant rent increases. The majority of markets we are working in are achieving 10%+ rent premiums.”

Student Housing Remains Stable, Resilient

Larry Jacobson, president and CEO of The Jacobson Company, tells GlobeSt.com that student housing is an attractive opportunity due to its strong fundamentals and proven stability amid economic downturns.

“During the 2008 financial crisis, college enrollment increased and throughout the COVID-19 pandemic the sector showed stability with occupancy and preleasing activity remaining virtually unchanged despite the move to remote schooling,” Jacobson said.

“As students continue to return to campus in full force, the student housing market continues to demonstrate its resiliency with strong pre-leasing and rental rates.

“In fact, at many top universities student housing supply is not keeping up with the increasing enrollment, creating favorable supply demand characteristics for investors.”

Added Yardi Matrix in its report, student housing is displaying record transaction volume, high rent growth and impressive risk-adjusted returns.

“The rent appreciation aligns with multifamily rent growth trends, and as there is still a spread between student housing and multifamily rents, this will continue to support the growth of the sector for years to come, especially in key markets such as the South and Southwest,” Yardi Matrix said.