Report highlights:
- March preleasing at Yardi 200 universities broke last year’s record, reaching a nearly 70% rate
- Rent growth was also strong, clocking in at $829 per bed in March—the highest average rent on record
- The under-construction pipeline increased, but virtually no new planned projects were recorded
- Economic headwinds have impacted student housing transactions, which fell sharply in the first quarter of the year
At a time when most real estate asset classes are experiencing a slowdown in growth, student housing is soldiering on and remains one of the best-performing sectors in real estate. Known to be one of the most resilient industries in times of economic volatility, the market has reached new records in terms of preleasing and yearly rent growth.
As of March, 69.7% of bedrooms at Yardi 200 schools were preleased for the fall 2023 term, marking a 7.8% increase since the first quarter of 2022. This is the second year in a row when March preleasing rates reach all-time highs.
Six universities were 100% preleased as of March, including Texas Christian University. These top schools had a limited number of properties for off-campus student housing. A total of 13 schools had at least a 90% preleasing rate. Topping the list of biggest year-over-year rent growth was the University of Mississippi (47.0%), along with the University of Southern Mississippi (44.1%).
Record rent growth in Q1
Annual rent growth for student housing properties was also remarkably strong in the first quarter, with a 7.0% growth on a year-over-year basis. In March, the average rent at Yardi 200 universities was $829 per bed, the highest average rent on record, and $2 higher than in February.
Rents at student housing communities have increased steadily since September. Generally, bigger schools with higher acceptance rates registered the highest rent growth. Purdue University led the list of institutions with the largest annual rent growth, reaching 29.6%, followed by University of Arkansas with 24.8 percent. Both schools were among the top 10 schools for highest percentage preleased in March, exceeding 90%.
Under-construction pipeline increases
At the beginning of April, 44,000 bedrooms at Yardi 200 schools were in various stages of development, marking a 20,000-bed increase since January. Signaling a forthcoming slowdown in construction activity, the pre-construction pipeline was somewhat unchanged since the beginning of the year.
The University of Texas at Austin boasted the largest under-construction pipeline across Yardi 200 institutions, with 5,555 beds in the making and a nearly 80% preleasing rate in March. Indiana University–Bloomington was second (3,910 beds under construction), followed by three Florida universities. In the Sunshine State, Florida International University had the most bedrooms under construction, with a 3,553-bed pipeline. The school has the highest capture opportunity rate (86.1%) in the nation, hinting at an easy absorption of new supply.
Read the full Matrix Student Housing Report-Q1 2023.
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