- New numbers show that the student housing sector is enjoying a rebound since being battered by challenges of the COVID-19 pandemic. Pre-leasing occupancy for privately owned student housing properties stands at 70.9% as of April 2022, the highest-ever for the month of April, according to data from RealPage.
- Rents are rising as well. As of April, rent growth had risen above 5.5% at properties near the 175 core campuses tracked by RealPage for the school year starting fall 2022. This breaks the previous record set in 2016 — about 2.6% in April — more than two times over.
- “The significant improvement of both pre-lease velocity and year-over-year rent growth shows demand has returned in a big way,” Carl Whitaker, director of research and analysis, market analytics at RealPage, wrote in his analysis of April 2022 student housing data.
Based on pre-leasing and rent growth performance, Whitaker said that the student housing market was showing the “most optimistic” performance in four years in the first quarter of 2022 — including before the pandemic — in a recent webinar update on student housing. Whitaker also anticipated that the full year would see the highest annual rent growth on record.
During the early stages of the COVID-19 pandemic in 2020, many universities made a switch to remote learning and shut down on-campus activities. This curtailed the need for students to live close to their universities in order to attend classes. Combined with uncertainty about conditions in the fall, there was a sharp decline in leasing over the rest of the year.
While pre-leasing occupancy had risen to a record high of 49.3% in February 2020, occupancy ultimately only rose to 87% by the year’s end. This marks the lowest rate recorded by RealPage in the last 10 years.
Given the impact of the COVID-19 pandemic on student housing, Whitaker noted that occupancy conditions reported in 2020 and 2021 are anomalies unlikely to be repeated in the years to come. If occupancy rises by even the second-lowest rate recorded, 2022 is on track for some of the best year-end occupancy in the past decade.
At the same time, RealPage expects one of the lowest student housing delivery volumes in decades this year, down to fewer than 30,000 new beds across the country. In the spring 2022 update webinar, Whitaker attributes this drop to a freeze in permitting following the start of the pandemic, and also notes that many popular targets for new construction at the start of the 2010s have “likely hit their supply and demand balances” and no longer require new student housing.