Despite forecasts issued late last year that student housing construction is slowing down, the demand for such housing remains as great as ever, says a new report.
The commercial real estate data and research firm Yardi Matrix is recording that both student housing rent growth as well as preleasing activity has shown record growth during the first quarter of this year, with the “momentum expected to continue for the remaining six months of the leasing season” until mid-summer.
The demand appears to be the most acute in “larger, more competitive universities where enrollment is increasingly concentrated.” The demand, additionally, is seen for housing both on and near campuses.
University markets located in urban or downtown areas seem to be seeing the greatest demand for student housing, a decided improvement over where things stood in late 2020 during the pandemic when such demand was significantly off.
Of the 200 universities surveyed by Yardi Matrix, just under 70% of beds were already leased for the fall 2023 semester. That number marks a 7.8% increase compared with the first quarter of 2022.
At the same time rents have increased by some 7% during the first quarter of this year, compared with January to March of last year, for an average of $829 per bedroom.
That $829 marks the highest rent ever recorded for this particular market segment.
The pipeline also looks promising, with around 70,000 student housing bedrooms currently under construction, a jump of 20,000 beds over the last four months of last year.
Despite all the good news, the Yardi Matrix report warns that “high interest rates, reduced debt-market liquidity and weakening investor sentiment” are combining to put a damper on long-term student housing construction prospects.
By Garry Boulard
