The student housing industry has remained resilient during the COVID-19 pandemic and economic uncertainty.
“Pre-leasing and rent growth for the fall 2021 term ended on a positive note, and fundamentals continue to look healthy as pre-leasing for the fall 2022 term is underway,” according to the latest Yardi Matrix National Student Housing Report. “Overall, we have a positive outlook for the dedicated off-campus student housing industry leading up to the fall 2022 term, particularly at highly selective universities.”
The pre-leasing period for fall 2021 for the Yardi 200, which includes the top 200 investment-grade universities across all major collegiate conferences, ended at 94.3% in September, up from 89.1% from fall 2020. Pre-leasing for this fall is already underway. As of November, 26.7% of the beds at Yardi 200 universities has been leased, which is an 11.3% increase over the same period in 2020 and a 5.9% increase over 2019.
According to Yardi Matrix, all of the Power 5 conferences are seeing pre-leasing growth for this upcoming fall term compared with the prior year. In particular, universities in the Big 10 had the highest percentage pre-leased, 40%, and the highest pre-lease growth, 18.7%, as of November.
The report also shows that universities having the most annual pre-lease growth as of November are primarily bigger schools with an annual enrollment surpassing 30,000 students. Topping the list is the University of Wisconsin-Madison, which had just over 44,000 students in 2020, with the highest pre-leased percentage, 97.7% and the most year-over-year pre-lease growth, 66%, as of November.
Amid the strong pre-leasing for this fall, rent growth among the Yardi 200 also is robust. As of December, the average rent per bedroom for fall 2022 was $791, the highest average rent for off-campus dedicated student housing that Yardi Matrix has seen in years and $2 over the previous month.
Six universities in the Yardi 200 with four or more student housing properties saw double-digit annual rent growth as of December. These universities are all located in larger city settings, including the University of California, Riverside, which experienced annual rent growth above 15% as of December, with an average monthly rent per bedroom at just over $1,000.
According to Yardi Matrix, the most expensive student housing rents are in those markets with a high cost of living. Four California universities land in the top 10 list of most expensive student housing rents per bedroom in December, including the University of Southern California, $2,476; UC Santa Barbara, $1,751; UC Davis, $1,226; and UC Irvine, $1,179.
Student Housing Supply
Student housing deliveries slowed last year, with just over 19,000 bedrooms delivered as of December at Yardi 200 universities. This is down from the more than 30,000 annual bedroom deliveries over the past several years. While not quite the previous figures, Yardi Matrix forecasts that just over 25,000 bedrooms will be delivered this year.
More than 135,000 bedrooms are in various stages of development at Yardi 100 universities, with approximately 49,000 under construction. Most of that development is concentrated in the Sun Belt, specifically the hot states of Florida and Texas.
Student housing transaction volume had started to slow prior to the pandemic after three consecutive years of growth. However, volume picked back up again in 2021 as strong leasing in the sector attracted investors, according to the report. As of December, sales volume reached $2.8 billion for the Yardi 200, with an average sales price per bed of $67,000.
Transactions also were more robust in the Sun Belt. Arizona State University-Tempe was the one university that saw more than $200 million in transactions in 2021, coming in at $223 million in total sales with an average sales price per bed of $189,000.