Investors Can Sleep Comfortably Given Student Housing Beds Numbers
Preleasing is up by 7.8 percentage points compared to a year ago.
Student housing industry performance continues to accelerate, achieving record-breaking rent and preleasing levels through Q1, according to the latest report from Yardi Matrix.
Leasing for fall is at a comfortable level for investors, with 69.7% of beds at Yardi 200 universities preleased – a 7.8 percentage point increase compared to a year ago and the second straight year March preleasing rates hit an all-time high.
Rents per bedroom hit the highest ever for the cohort at $829 per bedroom – a 7% spike.
Nonetheless, reduced debt-market liquidity and weakening investor sentiment are putting a damper on development and sales activity, Yardi said.
There were approximately 70,000 bedrooms under construction at the start of Q2, an increase of 20,000 beds over the previous quarter.
“However, the number of beds in pre-construction phases remains unchanged from last quarter, so as projects begin to deliver, there may not be as many developments to backfill in future years,” Yardi said.
“The skittish capital markets environment is also evident in transaction activity, with only $148 million in sales completed in the first quarter, down substantially from the $1.5 billion recorded in the first quarter of 2022.”
There were six universities in the cohort that were fully preleased by March, “though most of them have a limited amount of dedicated off-campus student housing properties,” according to the report.
Texas Christian University’s five properties were fully preleased for the fall 2023 school year by January.
An additional 13 universities, with a diverse mix of sizes and locations, preleased more than 90% of beds for the upcoming school year six months in advance.