National Student Housing Report – August 2023
Preleasing at Yardi 200 universities exceeded 90 percent in July.
Despite a deceleration in rent growth and preleasing, the student housing sector is still strong. Image by Ginnet Delgado/iStockphoto.com
As the 2023 fall term approaches, the student housing sector continues to be one of the best-performing asset classes in the industry. The sector is in a favorable position in the face of a looming recession.
Preleasing rates and rent growth slightly decelerated in July. Preleasing at Yardi 200 universities reached nearly 91 percent that month, up 4.6 percent since June and roughly the same as at that point in 2022. Yardi Matrix expects that final occupancy will be on par with last year’s level, at roughly 96 percent.
High interest rates have created a troublesome environment for student housing investment: the number of beds sold across Yardi 200 institutions in the first six months of 2023 dropped by 73.1 percent on a year-over-year basis. Prices were also 10 percent lower than in the first half of last year.
Preleasing for the upcoming school year started off with record-high rates. July, with an average rate of 90.9 percent, was the first month with negative growth on a year-over-year basis. A total of 21 universities at Yardi 200 were fully leased in mid-summer, while another 45 schools had a preleasing rate that exceeded 95 percent.
Despite a good rate on a national level, a few schools still struggled with preleasing. Yardi Matrix had 13 universities on record with a preleasing rate that was at least 10 percent lower than in July 2022, while 25 schools were up to 80 percent leased for the 2023-2024 school year.
Student housing rents continue to climb
Annual rent growth hit a new high in July. click to enlarge.
The average rent per bed at Yardi 200 schools reached $849 in July, a new high for the sector and up 7.1 percent year-over-year. A total of 38 universities recorded double-digit rent growth, while 33 schools showed a decline in rents.
In general, the schools with the biggest rent growth had also strong preleasing rates: the leading six universities with four or more properties had an average preleasing rate of 99.9 percent. Annual rent growth exceeded 20 percent at Purdue University, the University of Arkansas and Arizona State University.
