Yardi Matrix vice president Jeff Adler presented a look both forward and back for the student housing sector in a webinar held Wednesday, March 3. (Find the presentation materials and recording here.) Despite the challenges of the pandemic over the last year, the sector has held up relatively well. Rents are still increasing – but just slightly. Year-over-year rent growth was 1.3%, with Class B assets taking a larger hit than Class A or C housing.
Adler remains very positive on the student housing space, even though preleasing is currently behind its usual pace for Fall 2021. “We do expect the 2021 term to have a surge in enrollment and preleasing activity, but it will probably come late, in April and May, as the vaccine situation clarifies,” he said.
That was just one of many insightful takeaways from the presentation. Yardi Matrix produces a quarterly student housing report that summarizes leasing, rent rate, transactions and other trends.
The student housing data set includes over 2,000 universities and colleges nationwide, including the top 200 investment grade universities across all major collegiate conferences. Known as the “Yardi 200,” it includes all Power 5 conferences as well as Carnegie R1 and R2 universities.
Schools that have fared best with housing over the last year have been those that are not urban or in states with strict COVID restrictions in place, Adler said. Overall, national university enrollment is down 2.5% this year from a year ago. Currently, preleasing of student housing for Fall 2021 is trending four percent below where it was last year at this time. Preleasing for Fall 2020 ended up five percent behind 2019 numbers.
“Large, first tier institutions have done the best, and the top performers are those that have been in states and localities that were open for business (throughout COVID),” said Adler.
Universities that have preleasing off to a good start for the upcoming fall term were major public universities in remote areas and some universities near smaller downtowns. That includes schools like Case Western University, the University of New Hampshire-Main Campus and University of Pittsburgh-Pittsburgh campus, which are leading the way as top preleasing performers for Fall 2021. Schools that are falling behind on preleasing include the University of Illinois at Chicago, Brigham Young University and the University of California at Santa Barbara, which are all lagging far from their normal preleasing numbers.
As a result of the pandemic, housing providers are seeing higher demand for studios, single bedrooms and bedrooms with their own personal bathroom, Adler said. “Those without bedroom/bathroom parity are struggling (to lease). This may be an issue that continues, where you would have to have very significant discounts to overcome people’s desire not to share a bathroom.”
The desire for personal space will also impact on-campus student dorms, which may have to rethink double and triple occupancy situations due to parent and student concerns.
“I’m bullish about the whole sector, because dorm capacity just doesn’t work,” Adler said. It also doesn’t seem to matter whether schools are offering fully in-person learning, a hybrid model or all virtual classes. The school simply needs to be open for business in order for student housing demand to remain strong. “Our data showed that they wanted to get out of the house (in 2020) and they did.”
Development trends in student housing reflect what life will look like post-pandemic. High performance Wi-Fi, always a must, has become even more important. Apps that allow students to submit maintenance or service requests are trending, as are outdoor/open spaces where students can gather in person. And touchless features, like keycards for building entry or elevator operation, will be more prevalent.
Development of new student housing stock is primarily focused in the south and southwestern U.S. and has not been deterred by the pandemic.
Investment opportunity in the sector remains strong. Highlights include:
- Global Student Accommodation Group (GSA) made its first venture into the U.S. with the acquisition of a 27-property, 8,000-bed student housing portfolio across 18 states.
- Core Spaces has formed a new joint venture with two undisclosed global investors committed to $1 billion in U.S. student housing acquisitions.
- Global alternative investments firm Arcapita, announced the acquisition of “Clemson Lofts,” a 640-bed property at Clemson University. They also recently purchased a major University of Tennessee student property, “Quarry Trail.”
- CA Student Living bought two student housing properties, located in Georgia and Florida, for a total of 927 beds.
Yardi Matrix’ next webinar presentation will focus on the self storage market and be held on Wednesday, March 24. You can sign up to attend the free self storage overview here.
Student Housing National Outlook – webinar recording