Student Housing Rent Growth and Preleasing Performance Go Hand-in-Hand

Yardi’s recent report showed per-bed rents up to $858 in December.

Rents at one University of Tennessee-Knoxville property rose from the $800s to the $1,300 for the coming school year.

Coincidentally, that same market also preleased the fastest, according to the December National Student Housing Report from Yardi Matrix.

Ole Miss, Purdue and Arkansas are among those dual qualifiers, having shown strong rent growth and preleasing by 79% or greater.

Others—such as Kentucky, NC State and LSU—are also well ahead of last year’s preleasing pace, giving operators confidence to push rates more aggressively.

Nationwide, asking rates hit $858 per bed on average in December, marking a 4.9 percent increase on a year-over-year basis. Final occupancy for the Yardi 200 markets for fall 2023 was 94.6%, compared to 96.2% in fall 2022.

Even better for operators, preleasing for the 2024-2025 school year reached 47.3% in December 2023, compared to 38.4% in December 2022.

James Madison University in Harrisonburg, Va., showed the greatest year-over-year increase in preleasing rate, coming in at 63.9% followed by University of Mississippi (53.6%) and Binghamton (46.8%).

The report said that 51 university markets in the top 150 have already filled half their beds, while 10 are at least 75% preleased. Total enrollment for these schools is up 1.4% from the prior school year.

Higher interest rates, though, continue to drive down commercial real estate investment. Only 73 properties sold as of early 2023 data compared to an average of 205 properties sold annually in 2021 and 2022.

The average sale price also slipped, moving to $75,310 per bed in 2023 compared to $78,884 per bed in 2021-2022.