SANTA BARBARA, CALIF. – The student housing industry continued to show strong fundamentals in the first quarter of this year, with pre-rental levels off to a robust start and annual rental growth exceeding pre-pandemic levels, according to Yardi. National Student Housing Report for the second quarter of 2022.
In March, pre-letting for fall 2022 was 63.8% – a number 13.5% higher than the rates seen at the same time last year and 9.9% higher than March 2019 – and the average rent per room for fall 2022 was $777. These numbers were seen in the company’s “Yardi 200” markets, which include the top 200 blue-chip universities across all major college conferences, including Power 5 conferences and Carnegie R1 and R2 universities.
A handful of college markets were almost entirely pre-published in March, with Purdue University (99.9% pre-published), University of Pittsburgh (99.8% pre-published) and University of Wisconsin-Madison (98.3% pre-released) tops the list. Few universities so far are grappling with pre-letting in the fall of 2022, but those that are tend to have higher acceptance rates, according to the report. The University of Houston had the lowest percentage of pre-released rooms in Yardi’s 200 markets at 28.6%, with the university accepting about 63% of applicants.
Yardi forecasts another year of strong rental growth with some differentiation by university level. University markets that have historically experienced strong growth in pre-leases and rents are expected to continue to experience growth, but at a more moderate level, while universities that have experienced slower growth will continue to stabilize.
According to new forecasts released by Yardi Matrix, rent growth at its Yardi 200 universities is expected to stabilize and hover around 2% annual growth over the next few years. Fourteen universities in the Yardi 200 recorded double-digit annual rent growth, including the University of California, Riverside, with annual rent growth of 21%; the University of Nevada at Las Vegas with rent growth of 18%; and Wichita State University with rental growth of 15.8%.
Only three universities tracked by Yardi had negative annual rent growth in March: Florida International University with negative rent growth of 9.6%; the University of South Alabama with negative rental growth of 4.4%; and the University of California-Santa Barbara with less than 1.1%.
New deliveries continue despite materials and labor shortages
Delivery of student housing projects has not slowed since the pandemic, according to the report. Nearly 26,000 beds have been built at Yardi 200 universities in the past 12 months, and the company expects just over 28,000 rooms to hit the market this year, representing 3.7% of existing stock. .
Yardi’s report shows 130,000 beds in various stages of development within its Yardi 200 markets, with around 53,000 currently under construction. Most developments are geographically dispersed but concentrated in larger universities with a high percentage of students not currently housed in existing halls of residence or off-campus accommodation.
The University of Washington in Seattle has the most beds currently under construction with 3,476; followed by the Georgia Institute of Technology (Georgia Tech) with 3,163; The University of Texas at Austin with 2,950; the University of Michigan at Ann Arbor with 2,611 beds; and Virginia Tech University with 2,495 beds under construction.
The high volume of transactions continues
The industry continues to experience strong transaction volume as investors are drawn to the resilience of the sector. Sales volume in the Yardi 200 markets totaled $920 million in the first quarter, with an average selling price per bed of around $84,000. If this rate holds, Yardi predicts that 2022 will be on pace for another record year in terms of transaction volume.
The highest level of investment this year has been seen in the Sun Belt college markets, particularly in Florida. Four Florida universities were on the list with the highest sales volumes so far in 2022, with nearly $250 million in deals in the state of Florida alone.
The top five universities with the highest sales volume were the University of South Carolina at Columbia with $136.7 million in year-to-date sales; the University of South Florida with $116.2 million; North Carolina State University in Raleigh with $64 million; Texas A&M with $60.7 million; and the University of California, Berkeley with $52.5 million in year-to-date sales.