Robust Demand And Record Rent Growth: Student Housing Market Flourishes Despite Uncertain Economy

Students are locking in their living arrangements as they prepare to return to college campuses this fall.

As of June, 86.6% of beds at dedicated off-campus student housing facilities were preleased — a 5.2% increase from May and a 0.4% increase from the same period a year ago, according to Yardi Matrix’s third quarter National Student Housing Report.

Rents continued to rise for the fifth consecutive month at 7.2%, the Yardi report showed, which included 200 universities across the country. The average rent per bed was $846 per month, an all-time high.

“Given that 2022 held the previous rent record for student housing, obtaining more than 7% growth off of previous record high numbers is exceptional,” the report states.

But even with record rent growth and preleasing activity, the student housing sector is still feeling the impact of current economic conditions. Transaction volume is down about 73% from a year ago. Even so, developers continue to build student housing — about 153,000 bedrooms were in different stages of development in early July, an increase of about 28,000 In since the beginning of the year.

The University of Arizona-Tempe accounted for nearly a quarter of student housing sales through the second quarter. At an average sales price per bed of $178,000, the properties were selling significantly higher than the Yardi 200 average of $66,000 per bed.

The University of Texas at Austin has the most bedrooms under construction at nearly 6,000 in six properties. With two years of enrollment growth, the university should be able to absorb the new supply without losing too much rent growth.

Aside from the University of Texas, schools with the most bedrooms under construction were Indiana University-Bloomington, Florida International University, University of Minnesota-Twin Cities and Florida State University.

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Universities with the top rent growth include Purdue University at 26%; University of Arkansas at 22.7%; Arizona State University-Tempe at 21.4%; The University of Tennessee-Knoxville at 19.9%; and University of North Carolina at Chapel Hill at 18.5%.

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If they haven’t already figured out where they’re going to live, students at some universities will have trouble finding housing. Six of the Yardi 200 universities with four or more properties were fully leased as of June, and another 14 were more than 95% preleased.

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