Two Schools Dominate New Supply
Digested from RealPage
A development frenzy has hurt fundamentals at two Southern powerhouses.
Near fifteen universities there are more than 1,000 new off-campus beds under construction. But there are only two schools with more than 1,500 in the pipeline—Florida State and Texas A&M.
Both institutions are on pace for 2,400 new beds this Fall, which constitutes 11 percent of all new student housing supply.
The story behind the development surge at the two schools differs. At Texas A&M the theme is rapid enrollment growth with the institution adding a total of 12,700 students since 2011. Total housing inventory grew by 16,500 beds over the same time period.
“Into the 2017 leasing season, properties began dropping rents to help leasing velocity. Those located furthest from campus continued to see the biggest impact in terms of decline in year-over-year performance,” Taylor Gunn writes for RealPage. “Properties located less than a half mile from campus were able to keep leasing velocity in line with the prior year after dropping rents.”
At Florida State, enrollment growth has been relatively flat, growing by 1,000 students between 2011 and 2017. In that time, developers have added 8,400 beds of off-campus housing.
“The impact of this supply has come in phases, and the market appears to be in the early stages of a supply-induced slowdown again,” Gunn writes. “As of March 2018, prelease averaged 60.5 percent overall, down 430 basis points from last March. Surprisingly, rents have no taken a hit yet, with rent growth holding strong at 3.0 percent. This is in part because there are variety of price points available with existing housing, more than most markets.”