College Towns Show Rental Resiliency
Occupancy ran 150 bps above the national norm, doubling since the pandemic.
Investors will find the college towns resilient and therefore dependable performers, according to a report from RealPage, which cited that these markets tended to experience higher apartment occupancy than the US overall and more stability overall.
The report said college town markets, however, “offer less upside during boom periods, such as during late 2023 and 2022.”
Nonetheless, as of Q4 2023, occupancy in college towns ran 150 basis points above the national norm on a weighted average basis – a delta that has more than doubled since the pandemic.
Consider that as of Q4 2019 (the last full quarter before COVID-19) the delta between college town average occupancy and the national norm was only 60 bps.
Keeping these markets stable is the fact that college towns have less supply pressure. The units under construction inventory ratio (construction as a percentage of total inventory) historically runs lower in college towns than the national norm, RealPage said.
Across RealPage’s 25 college towns, the units under construction inventory ratio averaged about 2.9% during the last five years, compared to about 4.5% nationwide. This group includes Ann Arbor, Mich., Charlottesville, Va., Gainesville, Fla., and Provo Utah.