- Preleasing and rent growth slightly decelerated in July, but were still high
- Preleasing at Yardi 200 schools exceeded 90%
- Rents reached a new record high for mid-summer, at $849 per bedroom
- Transaction volume for the first half of the year was down by more than 73% compared to 2022
As the 2023-2024 schools year inches closer, student housing remains one of the most successful real estate asset class, with all signs indicating toward the sector being in a favorable position in the prospect of a possible recession.
Preleasing at Yardi 200 universities reached nearly 91% in July, marking a 4.6% growth since June and on par with 2022 levels. While both preleasing and rent growth have slightly slowed in July, Yardi Matrix projects that final occupancy will reach last year’s level, averaging at 96%.
High interest rates have put their toll on student housing investment. The number of bedrooms sold across Yardi 200 schools year-to-date through July decreased by 73.1% on a year-over-year basis. Prices were also 10.0% lower than in the first half of 2022.
The average preleasing rate exceeded 90% in July
Preleasing for the Fall 2023 school year kicked off with unprecedented strength, leading to record-breaking rates. In July the average rate reached 90.9%, marking the first month when preleasing was lower year-over-year.
A total of 21 universities at Yardi 200 were fully leased in mid-summer, while another 45 schools had a preleasing rate of at least 95%. Ohio University, University of Southern Mississippi and the University of Mississippi registered the largest annual growth in percentage of beds preleased.
Still, there were some schools that had a hard time achieving desirable preleasing rates. A total of 13 universities had preleasing at least 10% behind July 2022 rates, while 25 schools were less than 80% leased for the upcoming school year. Many of these universities recorded a decline in enrollment recently.
Student housing rents reached new record highs in July
The unprecedented preleasing rate early in the school year increased manager confidence and, implicitly, rents have gone skyrocketing. The average rent at Yardi 200 institutions reached $849 per bed in July, a new high for the sector and up 7.1% since the same period last year. A total of 38 universities recorded double-digit rent growth, while 33 schools showed declines.
The schools with the highest rent growth had also strong preleasing rates, the top six universities recording and average preleasing rate of 99.9%. Annual rent growth surpassed 20% at three Yardi 200 schools, namely Purdue University, the University of Arkansas and Arizona State University. The University of Southern California had the lowest, -11.3% rent growth across Yardi 200 institutions.
Read the full Matrix Student Housing Report-August 2023.