Pace of Student Housing Leasing is Slowing
Also advertised rent growth for the schools Yardi tracks has continually moderated throughout the leasing season
Student housing has been 85.2% preleased for June 2024, the same as in June 2023, but the pace of leasing is slower, according to Yardi Matrix’s July 2024 national student housing report.
However, the degree of preleasing varied significantly from institution to institution. Some 10 schools were already 99% preleased, and preleasing was 10% ahead of last year at 28 universities. Schools with the greatest annual preleasing growth were led by Central Michigan, the University of Nebraska, Bowling Green State, Mississippi State, and University of Missouri.
But 27 others were not even 70% preleased, with 13% well behind 2023 levels, including small schools and large ones like Washington State and the University of California, Berkeley. Preleasing was running 10% or more behind last year’s levels at 34 schools, even though some were more than 81% preleased.
Advertised rent growth for the schools Yardi tracks has continually moderated throughout the leasing season to 5% in June, though it averaged 6.1% since October 2023. Rents grew by 21.1% at the University of Tennessee but fell 9.1% below 2023 levels at the University of Memphis.
“Rent growth has been slower at schools that have seen the most improvement in preleasing, while some with slower preleasing have had stronger rate growth,” the report noted. It added that rent growth could also be impacted by projections of slower enrollment growth in fall 2024. Schools with the least rent growth were on average only 67.4% preleased and exhibited declining enrollment.
Advertised rent per bed averaged $898 in June 2024, up 5% from the prior year. It slowed throughout the leasing season from 6.9% earlier this year “but still solidly above previous years and well above multifamily.” Double-digit rent growth was experienced in 41 markets, including many larger markets with more beds but increased enrollment. Yardi projected an inflow of 45,500 new beds in the 200 schools it tracks, up from 37,576 beds delivered in 2023.
However, there are concerns that freshman enrollment for fall 2024 could be hurt by problems with filing the Free Application for Federal Student Aid (FAFSA) forms that have been linked to a 7% drop in financial aid applications.
Recent sales of student housing properties have nearly matched last year’s levels, with over $1 billion raked in from 40 transactions. More are expected by the year’s end, but high interest rates are likely to keep sales volume below a typical year, Yardi said.