Student Housing Operators Wrap Up Strong Leasing Season
Digested from Axiometrics
While effective rent growth remained healthy, leasing moderated in 2017. Many student operators in Texas will see the additional competition next year.
The 2017-2018 student leasing season is over and the market remained strong for another year, though there were some hints of moderation, according to Axiometrics’ Taylor Gunn.
Axiometrics reports that annual effective rent growth for purpose-built student housing properties remained healthy while leasing velocity moderated very slightly from the previous year.
Student leasing begin in the spring. As of June, leasing velocity was 30-basis-points (bps) below the 84.4 percent posted last fall. Apartments closest to campus still have the highest velocity and can charge the most in rent, but they are seeing moderation in year-over-year leasing velocity. Student apartments located less than one-half miles to campus fell 35 bps to 86.3 percent in June. “Prelease at properties located between one-half mile and one mile are up year-over-year, though they don’t have the highest percentage leased,” Gunn wrote. “This is primarily because these properties aren’t competing directly with new supply and are still well-located.”
Another 46,000 beds should be arriving this fall, providing further competition in many markets. Axiometrics has identified 41,700 beds to be delivered for fall 2018, though almost 12,000 of them have not started construction. Texas Tech leads the pack with 3,700 new off-campus beds coming to market, followed by Texas A&M with 2,336 beds. The school has another 2,400 beds on the way for 2018 delivery.
“While none of the other universities in the list above have quite the same volume of supply, neither have they had the same amount of enrollment growth,” Gunn wrote. “However, most of the universities above will receive more new supply from 2015 to 2018 than the total amount of demand growth expected for the same timeframe, student housing research showed."