The student housing industry scored high marks for the third quarter, with fall pre-leasing closing at a record percentage and rent growth remaining strong. According to the new quarterly National Student Housing Report from Yardi Matrix, the pre-leasing period ended in September with 96.6% of bedrooms leased at Yardi 200 universities for another record-breaking year. This is a 2.3% increase over last year’s record.
Yardi Matrix said the pace of pre-leasing was faster for some universities with higher enrollment, but positive performance was seen across university types nationwide. Led by Washington State University with 18.9% growth and the University of Houston with 16.4% growth, 12 universities saw double-digit gains in pre-leasing levels in September compared with last year.
The University of South Alabama saw the lowest percentage of bedrooms pre-leased, 80.6%, as of September; however, this is a record high for the university. According to the report, 30 of the Yardi 200 universities experienced a year-over-year percentage drop, but not significant decreases.
In addition, annual rent growth was 4.1% as of September—down from the peak 5.1% earlier in the year. The average rent per bedroom remained flat month over month at $789 in September.
For Yardi 200 universities that have four or more properties, 12 had double-digit annual rent growth as of September. Northern Arizona University topped the list at 17.7% growth, followed by the University of California at Santa Barbara at 17.3%.
Only four universities in the Yardi 200 with four or more properties experienced year-over-year decreases in rent growth, led by the University of South Alabama with a 3.3% drop.
“Despite rents starting to cool a bit across the country, a surge in applications to competitive universities and exceptional pre-leasing activity across the country indicate rent growth should remain healthy over the short term,” stated the report.
Yardi Matrix noted that elevated transaction activity for student housing continues despite rising interest rates and the new supply pipeline is robust, adding that “confidence in the sector is strong, although there are signs of some slowing.”
Yardi 200 universities have seen approximately $3.9 billion in sales volume this year through September, with activity approaching 2021’s record levels. However, Yardi Matrix said the average sales price per bed seems to be moderating. South and Southwest universities have seen the most investment, with Arizona State University-Tempe topping the list with $335.58 million in sales year to date.
The new supply pipeline for off-campus student housing remains strong but has decreased by a few thousand bedrooms since the prior quarter. Just over 130,000 bedrooms were in various development stages at Yardi 200 universities in September, with almost 62,000 under construction. The University of Texas at Austin tops the list, with over 5,000 bedrooms under construction.
“With recent news of supply shortages at a handful of universities, a shrinking new supply pipeline could boost pre-leasing and rents but pose a problem for universities unable to house students,” noted the report.
