Pandemic Means Bad News for Student Housing Market in Fall 2020
While near-term metrics for student housing contain bad news, analyst Keegan Kelly wrote that the market is likely to recover when a reliable vaccine becomes available, hopefully by the start of the 2021-22 school year.
The student housing market will suffer in fall 2020 due to the coronavirus pandemic, Reis found in its Q1 analysis of student housing dated May 21.
Uncertainty over college and university plans for on-campus instruction remained in early July, with COVID-19 cases continuing to rise in many states. While near-term metrics contain bad news, analyst Keegan Kelly wrote that the market is likely to recover when a reliable vaccine becomes available, hopefully by the start of the 2021-22 school year.
Property vacancies by bed are expected to rise from 5.2% in fall 2019 to 7.4% in fall 2020, Kelly wrote, and vacancies by unit are expected to rise from 2.3% to 3.3%.
By fall 2021, both categories are projected to see a partial recovery in vacancy rate.
With demand weakened by some schools opting for online classes and families choosing to keep their students at home, rents are also expected to fall. A decline of 4.6% is expected to properties by unit, with a 6.1% dive expected for properties by bed.
The rent decreases will affect property owners nationwide, but the southwest is expected to see the largest decline in rent, according to the analysis.
As with the vacancy rate, property owners’ prospects are expected to improve by fall 2021, with only a small rent decline projected.
The outlook for inventory growth has also been affected by the pandemic, with construction categorized as nonessential in some areas. Before the pandemic, inventory for properties by bed was expected to rise 4% through the fall and inventory for properties by unit was expected to rise 1.7%.
Now the projections have been lowered to 3.3% for properties by bed and 1.1% for properties by unit, and the future of unfinished projects is in question.
While there’s reason for hope that improvements in public health will lead to recovery in 2021, Kelly warned that if the pandemic spurs large numbers of students to pursue online learning in the long term, the market could encounter ongoing troubles.