Yardi Matrix: Record Student Housing Performance Last Year

(Syracuse University)

The student housing industry is positioned for solid performance in 2023 after posting record returns last year, the latest National Student Housing Report from Yardi Matrix said.

“Momentum is strong heading into the new year, even as the effect of higher interest rates takes hold in the economy and has led multifamily rents to decelerate,” the report said. “Student housing remains largely unaffected, as the industry typically does better during times of economic volatility.”

Just under half–48 percent–of beds at the top 200 investment-grade universities were already leased for the fall 2023 school year as of year-end 2022, representing a new record high for this time of year. Rent growth remained strong at 4.7 percent annual growth.

“With over eight months to go until the start of the next school year, we anticipate 2023 being another record-breaking year for student housing performance,” Yardi said.

But the report noted one caveat: highly selective universities with name recognition are maintaining their interest among incoming students, but smaller schools are having more difficulty with enrollment. The Hechinger Report said 48 colleges closed in 2022, “and a new wave of closures is expected this year.”

“The slowing economy is having an impact on new student housing supply,” the report said. “With interest rates increasing, the development pipeline is contracting.” It said the development pipeline for the top 200 investment-grade universities (including planned, prospective and under-construction properties) decreased by more than 3,000 bedrooms from December to January, representing a 2.6 percent contraction.

The student housing data set included more than 2,000 universities and colleges nationwide, including the top 200 investment-grade universities across all major collegiate conferences. It included all Power 5 conferences as well as Carnegie R1 and R2 universities.