US: The student housing sector is outperforming other real estate verticals, according to the latest National Student Housing Report from Yardi Matrix.
Rents increased seven per cent year-over-year in March to an average of $829 per bedroom, a record high.
March pre-leasing rates also surpassed last year’s record. As of last month, 69.7 per cent of beds at Yardi 200 universities were pre-leased for the fall 2023 term, a 7.8 percentage point increase compared to a year ago.
“A sector that often performs better during times of economic volatility, student housing continues to achieve record-breaking rent and preleasing levels,” said Matrix analysts.
Demand is strongest in the most competitive universities where enrolment is increasingly concentrated, producing demand for housing. The need is exacerbated at schools located in downtowns with largely conventional multifamily markets.
However, there are some clouds on the horizon. Higher interest rates, reduced debt-market liquidity and weakening investor demand are slowing development and sales. Investors backed off of purchases dramatically in Q1 2023, with only $148 million in sales completed, down substantially from the $1.5 billion recorded in the first quarter of 2022.
At the start of Q2, there were approximately 70,000 bedrooms under construction, an increase of 20,000 beds over last quarter. However, the number of beds in pre-construction phases remains unchanged from Q4 2022, so as projects begin to deliver, there may not be as many developments to backfill demand.
The Yardi Matrix student housing data set includes more than 2,000 universities and colleges across the US, including the top 200 investment grade universities across all major collegiate conferences. Known as the Yardi 200, it includes all Power 5 conferences as well as Carnegie R1 and R2 universities.
Click here to see the latest Yard Matrix Student Housing Report.
