Student housing performance was strong in Q3, with first signs of a slowdown
The new academic year began with a record number of bedrooms preleased at Yardi 200 universities.
Report highlights:
- The fall 2022 preleasing period closed with a record number of bedrooms leased at Yardi 200 universities
- Supply is still short at several Yardi 200 universities with increasing enrollment, fueling healthy demand for new product
- Annual rent growth was exceptionally high in September, but starting to decelerate
As of September, preleasing at Yardi 200 institutions hit another record high, with 96.9% of beds leased, outperforming last year’s record by 2.3%. By the time the new school year begun, more than 50% of universities had a preleasing rate that exceeded 97%. The process was quicker at selective schools with higher enrollment, while very few universities struggled with leasing.
The institutions with the biggest year-over-year growth in percentage preleased were Washington State University (18.9%), University of Houston (16.4%) and University of South Alabama (13.4%)—which also had the lowest percentage of bedrooms preleased (80.6%) across Yardi 200.
First signs of student housing rent growth slowing
Annual rent growth has decreased from its peak of 5.1% this year, to 4.1% percent in September. The average rent at Yardi 200 schools was $789 that month, virtually unchanged month-over-month. Even though rent growth has cooled, the gap between student housing and multifamily rents is still bolstering demand.
Across Yardi 200, Northern Arizona University (17.7%) and the University of California-Santa Barbara (17.3%) recorded the largest annual rent growth, with only four properties having negative figures. The University of South Alabama registered the largest year-over-year decrease in rent, contracting by 3.3%.
Development pipeline starting to decrease
As of September, 130,000 bedrooms were in various stages of development at Yardi 200 universities, of which 62,000 were under construction. The market’s development pipeline shrunk by a few thousand bedrooms since the previous quarter but remained robust. Roughly 18,000 beds were completed over the last 12 month leading up to September—down from 30,000 at the end of the last quarter.
The University of Texas at Austin is leading the list of top universities with the most bedrooms under construction, bearing a 5,315-bed pipeline, followed by Indiana University-Bloomington (3,979 beds) and University of Michigan-Ann Arbor (3,714 beds).
Student housing still attractive to investors
Year-to-date through September, the total sales volume at Yardi 200 schools added up to $3.9 billion, nearing last year’s record. The average sale price per bed reached $72,000. With student housing not as competitive as the multifamily market, the sector is still luring investors, with universities in the South and Southwest attracting the most deals.
The schools with the highest sales volume through September were Arizona State University-Tempe ($335.6 million), University of South Florida ($314.8 million) and University of North Carolina at Charlotte ($218.3 million).
Read the full Matrix Student Housing Report-Q4 2022.
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