Student Housing Market Insights: Rising Rents and Pre Leasing Trends in 2023

As the fall term of 2023 approaches, the student housing sector remains a standout performer within the industry, demonstrating resilience even in the face of an impending recession.

During July 2023, there was a slight deceleration in pre leasing rates and rent growth. At universities covered by the Yardi 200, the preleasing rate reached nearly 91 percent, marking a 4.6 percent increase since June. This figure was consistent with the same period in 2022. Yardi Matrix's projections indicate that the final occupancy rate will likely mirror that of the previous year, hovering around 96 percent.

The current landscape of high interest rates has posed challenges for investment in student housing. In the first half of 2023, the number of beds sold across Yardi 200 institutions experienced a significant 73.1 percent year-over-year decline. Additionally, prices were notably 10 percent lower than those recorded in the first half of the preceding year.

The commencement of preleasing for the upcoming academic year commenced with historically high rates. However, in July, there was a noteworthy shift as the average rate dipped to 90.9 percent, marking the first instance of negative year-over-year growth. At mid-summer, a total of 21 universities within the Yardi 200 had achieved full leasing, while an additional 45 schools boasted pre leasing rates exceeding 95 percent.

Although the national preleasing rate remained favorable overall, certain institutions encountered challenges in this regard. Among the Yardi Matrix universities, 13 recorded pre leasing rates that were at least 10 percent lower than those of July 2022. Additionally, 25 schools struggled to reach an 80 percent pre leasing rate for the upcoming 2023-2024 school year.

Upward Trajectory in Student Housing Rents Persists

In July, the average rental cost per bed within the Yardi 200 institutions surged to $849, marking an unprecedented peak for the sector and reflecting a substantial 7.1 percent year-over-year escalation. Notably, a notable 38 universities achieved double-digit growth in rent rates, while a slightly smaller figure of 33 schools encountered a decline in their rental charges.

A noteworthy correlation surfaced between robust preleasing rates and substantial rent growth, particularly evident among the top six universities possessing four or more properties. This group displayed an impressive average pre leasing rate of 99.9 percent. Exceptional annual rent growth, surpassing the 20 percent threshold, was observed at distinguished institutions such as Purdue University, the University of Arkansas, and Arizona State University.

As the student housing sector thrives and evolves, securing a successful preleasing season has never been more crucial. This is where Gallagher & Mohan step in as your trusted partners. With their extensive industry knowledge and innovative solutions, they are well-equipped to elevate your pre leasing strategy to new heights.

We bring a wealth of experience in understanding market trends, student preferences, and effective marketing techniques. Their tailored approach ensures that your properties are positioned to attract and engage prospective tenants, translating into higher pre leasing rates. By leveraging their expertise, you can tap into a comprehensive suite of services that encompass market analysis, marketing campaigns, and strategic pricing strategies. Contact us now.