Student Housing Preleasing Slows Amid Government Bureaucracy

Preleasing for the Yardi 200 — all Power 5 conferences as well as Carnegie R1 and R2 universities — hit 80% in May, according to the Yardi Matrix Student Housing National Report June 2024. That’s slightly better than in 2023.

Five schools completed pre-leasing for this coming fall and 34 were over 90%.

And yet, the ongoing process is slowing and there is concern that a big reason might not be the dynamics of a CRE market, but government bureaucracy.

Things have been looking good. The average rent per bed hit $897 in May. That’s 5.3% over the same period in 2023. Yardi is projecting that 45,495 new beds will be available at Yardi 200 schools in 2024. That’s up from 37,576 beds in 2023 and near previous peak years of 2013 and 2014.”

But year-over-year and month-over-month preleasing figures have fallen as preleasing slowed. Growth rates have reached their lowest of the season. “Rent growth is strongest in some of the markets that have preleased at the fastest pace, including 41 markets with over 10% growth, while 34 markets have seen rents remain flat or decline this year,” Yardi wrote.

Also, sales of student housing properties lag last year and are “well behind a normal year, as sellers and buyers are hesitant to do deals in today’s interest rate environment.” Through the end of May, 26 properties were sold. Same time last year, it was 33. However, 25 universities were at preleasing below 60%.

So, what is happening? Suspicions are falling on a single anagram: FAFSA, or the Free Application for Federal Student Aid. The form is a virtually mandatory step for any family to secure financial aid. But after a large overhaul, the Department of Education only released it at the end of 2023, about three months later than usual, as CNN reported, and even early in January the online availability was spotty. “Since then, the FAFSA process has been plagued with problems and glitches, making it hard for some students and families to complete the form,” they wrote. And then back-end calculation mistakes may have affected as many as a million completed forms.

The impact was fewer families having completed the FAFSA compared to more normal years. As a result, schools are far behind in issuing financial aid awards to students who need to decide where they’re going to college and for whom levels of financial aid are critical information.