For Student Housing, COVID-19 Boost May Be Short-Lived
Student housing has not suffered greatly, but when will occupancy return to pre-pandemic levels?
Due to the coronavirus pandemic, colleges around the United States have had to decide whether they would open for in-person classes or commit to online learning instead. Some schools, such as the University of North Carolina, opened for in-person classes but reversed that decision after 177 COVID-19 cases were reported soon after.
Jaclyn G. Fitts, an executive vice president at CBRE who co-leads the firm’s National Student Housing Team, says that the impact of COVID-19 on off-campus student housing hasn’t been too severe.
This off-campus student housing property at Old Dominion University in Norfolk, Va., offers a smoothie shop, a student gym and a salon. Image by Brett VA/ Creative Commons
“It’s actually has been relatively positive from the standpoint of occupancy,” she said. “The off-campus market has really benefited from the de-densification of on-campus housing, where the dorms have been closed either to allow for more social distancing or to take dorms offline for quarantine situations.”
Fitts said that after North Carolina State University announced they were closing their on-campus dorms, the owner of an off-campus property told her that they signed 40 leases in one day. “Even with on-campus housing closing, because they’re going virtual, a lot of those students are staying in their college town and filling all the vacancies that remain in the off-campus rentals,” she said.
But the boon to the student housing sector may not last long. In its second quarter 2020 quarterly report, Moody’s Analytics REIS forecast that vacancies will rise from 80 to 210 basis points. And DBRS Morningstar stated recently that student housing is more volatile than traditional multifamily properties, predicting “significant headwinds” ahead due to COVID-19.
Still, Fitts is upbeat about the sector and thinks that the 2021-22 academic year will be “an amazing, dynamic year,” citing the return of international students as well as those who elected to take a gap year rather than attend college virtually.
According to Moody’s, a return to pre-pandemic levels of demand for student housing relies on the availability of a COVID-19 vaccine or reliable therapeutics. Assuming these come, Moody’s forecasts that vacancies will decline over the next two years, falling to just under pre-COVID-19 levels by the fall of 2022.
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