Student Housing Pre-Leasing Tops Last Year's Record Pace

Student housing performance during the pre-leasing stage for next fall’s semester has largely exceeded year-ago figures, as the Yardi 200 list of markets is 25.2% leased, well ahead of last year’s record-setting pace of 10.4%.

Solid renewal activity early has also led to 6.6% rent growth in October 2023 compared to 4.7% in October 2022.

Fourteen universities in the Yardi 200 are over 40% preleased, compared to only two schools at this time last year. Rent growth in these markets averaged 10.8%. The University of Tennessee, the University of Wisconsin, and Clemson are 60% to 70% preleased as “properties there are taking advantage of their fast start by pushing rates,” according to the report.

The report has 20 markets with a total of 236 properties are over 20% ahead of last year’s lease-up pace.

There are 11 universities with 63 properties that were 10% or more behind last year’s lease-up pace in October 2023.

One is Purdue University, one of the best markets last year, which was 24.3% preleased, compared to 36.4% at this time last year.

“Most of these are smaller markets that have also been more cautious pushing rental rates,” according to the report. Purdue, however, is seeing its rents up by nearly 30%.

There are 37 markets in the Yardi 200 posting double-digit year-over-year growth, averaging 15.1% in October, and 34 markets showing rent declines, mostly losing about 2.5% to 0%.

Investment activity so far has fallen significantly from last year, with only 66 dedicated student housing properties sold compared to more than 200 at this point a year ago. Price per bed is also down, to $71,703 vs. $76,095 last year.

High interest rates are the main culprit for the slowdown.