Adobe Stock / Siam Pukkato

The student housing industry is set to regain some of its lost strength in the coming year, owing to the reopening of the economy, ongoing vaccine distribution, and an imminent return to campus for most colleges and universities, according to Yardi Matrix’s Student Housing Report for Q2 2021.

As of April, preleasing for fall 2021 was lagging previous years at 58.6% for the 200 colleges and universities in Yardi’s data set. While this is about 4.2% lower than in April 2020 and 5.8% lower than in April 2019, it is still up 7.8% from March. Yardi anticipates this percentage will continue to rise as vaccinations and enrollments continue. Oregon State University has seen the strongest YOY preleasing percentage growth out of the Yardi 200 at 22.5%, followed by the University of New Hampshire-Main Campus at 20.8%.

Year-over-year rent growth for dedicated off-campus student housing fell earlier this year to 0.6% in March, but began to rise again in April, up 1.2% YOY for the Yardi 200. Yardi expects student housing rents to either remain stable or rise modestly in response to demand over the summer. New Mexico State University and University of Southern California both experienced the highest YOY rent growth at over 10%. The University of California-Berkeley had the most expensive student housing overall at an average monthly rent of $3,518 per bed, followed by Georgetown University at $2,585 per bed.

Overall, universities in Eastern states have shown stronger preleasing and rent growth rates than universities in Western states. College towns are also generally performing better as a campus setting, according to Yardi, given a lack of competition from conventional multifamily properties.

Student housing deliveries maintained their pace despite the pandemic, with just over 12,000 bedrooms delivered at Yardi 200 universities last year, or about 2.2% of existing inventory. For comparison, about 13,000 bedrooms were delivered in 2019, or 2.4% of existing stock. There are currently 40,000 units in various stages of development, with 15,000 under construction. Most of this development is concentrated in the Southern and Southwestern U.S., namely in Arizona, Florida, and Texas.

Some universities may be at risk of absorption issues due to high volume. Florida International University, for example, is poised to almost double its housing inventory with units under construction, but has only preleased 25.6% of its existing bedrooms as of April.

Transaction volume fell off in 2020, down to $1.5 billion in total sales, but the average price per bed remained about the same at about $71,000. So far 2021’s transaction volume stands at more than $600 million, with an average sales price per bed of about $64,000.

Overall, Yardi maintains a positive outlook for the off-campus student housing industry going into the fall 2021 semester and beyond, driven by demand from new graduates, students returning from gap years taken during the pandemic, and the return of international students. Potential headwinds may include localized supply-demand imbalances.