The student housing market is on the rise after the health crisis, outperforming last year’s fundamentals and prepandemic rates. In June, the sector registered record-high preleasing activity for the upcoming academic year and a 5 percent annual rent growth rate, unprecedented in the student housing industry.
As students lean more toward on-campus learning, management companies are getting ready to cater to their needs, expecting high occupancy levels. RPM Living, one of the largest national management companies, continues growing its student housing branch following the firm’s expansion into the Midwest and Southeast last year.
In an interview with Multi-Housing News, Theresa Sopata, RPM’s new vice president of client services over the firm’s student housing vertical, shared her views on occupancy growth in the new academic year, the company’s business strategy and emerging trends on the market.
How has the new academic year begun for student housing property managers this year?
Sopata: The sector’s resiliency, continued growth and, therefore, ongoing collegiate housing demand have been factors in the catalyst to recent, national headline news with various outside institutional investors taking a leap of faith into student housing.
We have witnessed most of our markets outperform pre-pandemic numbers throughout the prelease season and into the 2022-2023 academic year and expect this to continue as we head into renewal season. In select markets, we witnessed rent growth as high as 6 percent year-over-year and the highest physical occupancy recorded this month was 99.8 percent.
Please tell us a few details about the size of RPM Living’s student housing portfolio. What kind of student housing properties do you manage, and which markets does RPM Living focus on?
Sopata: RPM currently manages over eight total purpose-built student housing assets totaling 4,300 beds throughout seven markets across six states. Our student operations leadership team has experience in nearly 80 markets spanning 23 states, with over 60 years of combined student housing experience. The firm is not focused on expanding in any specific market, rather we are committed to growing our portfolio nationwide, which builds on RPM Living’s overall business strategy to strengthen its expertise in the student field.
What is the average occupancy rate for this academic year across RPM Living’s portfolio? How has occupancy changed in the past few years and what are the main factors influencing it now?
Sopata: The same store occupancy average was in line or above 2021 occupancies. Our experience has mirrored that which most in the industry saw. The larger Tier 1 universities that were able to maintain or even increase enrollments were also able to maintain mid-90s occupancy, while smaller markets and large commuter schools endured results that were not as favorable.
Preleasing for this fall outpaced annual rates in most of our markets, as students begin to feel some urgency in securing housing as the sense of normalcy returned. Luckily, the pandemic did not create a new reality that collegiate instruction could solely rely on virtual methods. Online classes have been offered for more than two decades, and some thought the pandemic could more heavily sway the proportion of online and in-person classes. Ultimately, the full college experience is still the driving force behind the post-pandemic recovery of student housing.
Are there any measures taken during the COVID-19 pandemic still in place for this academic year?
Sopata: Many post-pandemic trends have really stuck for the most part as many of them were already in movement prior to the lockdown. The pandemic’s urgency and unknown environment pushed trends to the front lines. Like other managers, we were challenged to find more virtual ways to assist our customers and many of them are still in place today. The convenience factor is key when referring to trends that emerged and stuck with a demographic that relies heavily on technology and innovation. Think faster procedures for move-in day, increased communication methods with on-site team members and information delivery in ways that tend to be more consumed by our client demographic—such as how-to videos instead of email instructions.
Virtual tours and self-guided tours were two popular trends that emerged out of the pandemic in both the multifamily and student industries. These services remain popular as they offer convenience and flexibility. We’ve also implemented Flex and Latch, two additional services that offer flexibility for self-qualifying during the leasing process and assistance in making on-time rental payments, respectively.
Lastly, the emphasis on health safety measures remains in place today, such as touchless sinks and doors, and the desire to live within units that offer more space and privacy such as private rooms with bed-to-bath parity.
Have you noticed any trends or changes in terms of students’ preferences when it comes to where they want to live while studying?
Sopata: For starters, location is and will always remain the number one amenity. However, residents have really shown interest in the non-material amenities, such as convenience, excellent customer service, reliable communication and resident-to-management relationships. At RPM, our multi-layered support teams, low property-to-RM ratio, and tenured on-site team members ensure each of those points are exceeding resident and parent expectations.
READ ALSO: The Student Housing Amenities Most In Demand
What are some of your priorities as the new vice president of client services at RPM Living? Please list a few of your short-term and long-term goals.
Sopata: I have witnessed the student housing management landscape evolve and change drastically since my initial business development position nearly 10 years ago. Over this period of time, not only has the sector grown, matured and became less fragmented but so has the number of student housing management options.
Having said this, I have an expansive knowledge of what differentiates RPM from other third-party management companies from personal experience. My immediate short-term goal is to establish RPM as a well-known and respected brand throughout the industry. While we certainly would love to see the portfolio grow significantly, our number one goal is to ensure we are handling our growth with grace, patience and intelligence. The portfolio size will plateau if we are not focusing on taking care of our clients, employees and residents.
In the long term, I wish to see our portfolio grow from coast to coast, working with various investors and developers in markets of all sizes.
Given your previous experience in portfolio growth, are there any specific markets that you intend to extend to over the next 12 months?
Sopata: RPM Student’s growth is focused on expanding third-party management and pre-development and development services with various clients that are reviewing opportunities from coast to coast. We’re especially excited to see growth in RPM’s home state of Texas. There are several strong markets, and I believe there are plenty of opportunities for investors here, from value-add opportunities to new developments. I work remotely out of Michigan, so I am also excited to keep a pulse on the Midwest where I anticipate more migration.
What are your expectations for this academic year? How much do you anticipate the current economic volatility to impact student housing?
Sopata: I fully expect the sector’s performance in terms of overall occupancy and prelease to continue to meet or exceed its year-over-year goals. When we narrow in on rental growth, that really is market-to-market, but regionally I expect the Sun Belt, western states like Texas, Colorado, Idaho, Utah and the East Coast to trend upward.
In terms of sales volume and investment, many groups I have been chatting with have told me they are on hold or currently waiting out the market to see what happens with rates. However, with new capital flowing into the space, an increased number in portfolio sales and the cap rate spread, I would be surprised if the 2022 sales volume doesn’t shake out above 2021.