It’s Another Fast-Paced Pre-Lease Season for Student Housing

Preleasing for the 2024-2025 student housing leasing season is again moving at a breakneck pace, reaching 61.5% in February 2024, 450 basis points ahead of February 2023, according to Yardi Matrix’s latest student housing report.

It’s more than 10% ahead of the average from 2019-2022.

Student housing is outperforming nearly every asset class, as demand remains solid and supply in check.

The market is absorbing the more than 46,000 beds coming to market “as enrollment growth has created a supply-demand imbalance over the past few years, particularly at the fastest-growing schools,” according to the report.

“Preleasing has started earlier each year, as operators take advantage of surging demand from enrollment growth and limited supply delivered in the past few years.”

Of the 178 schools with preleasing data in February, 42 were more than 70% preleased, vs. only 29 at the same time last year, and 16 were more than 80% preleased.

There are 42 markets where preleasing was more than 10% ahead of last year’s pace. This list includes notable markets that failed to reach 90% occupancy last year, including Illinois State, Johns Hopkins, Nebraska, Penn/Drexel, Mississippi State, and the University of Southern California.

Yardi Matrix’s supply forecast projects 46,285 new beds will deliver in 2024 and near the 2013 and 2014 peak years. It expects supply to drop over the next five years, below the long-term average of 36,322 beds per year going back to 2010.

Far fewer student housing properties were sold in 2023 – just 78 – compared to an average of 205 properties that traded hands in 2021 and 2022. The price per bed was also down about 5% to $75,000.

It appears that 2024 could be another slow year for investment sales as there have been nine recorded sales in 2024 – about equal to the sales pace in the first three months of 2023.

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