COVID-19 Pandemic Slows 2021 Student Housing Pre-Leasing
The student housing market is still feeling the impacts of the COVID-19 pandemic. Pre-leasing for Fall 2021 got off to a slow start as students lack certainty about what the coming months will bring.
The first three months of the Fall 2021 pre-leasing season lagged previous years. As of December, 26.8% of beds at the 175 core universities tracked by RealPage had been pre-leased, falling short of the year-ago rate of 33.3%.
A sluggish start to the Fall 2021 leasing season suggest that many students are taking a wait-and-see approach about the pandemic before committing to a lease. The industry saw leasing activity ease late last year due to virtual learning and campus closures that diminished campus life, at least for a while. Ultimately, students could be waiting to take cues from the schools based on their remote learning situation. If Fall 2021 looks more normal, pre-leasing could rise to typical levels.
Broken down by distance to campus, properties within a half mile are slightly better pre-leased then those farther out, but all lag performances from past years.
Many of the students who have signed leases for Fall 2021 seem less convinced of the premium associated with living near campus this year. While remote learning options vary widely by school and major, and some students still prefer to be on campus to maintain as normal a college experience as possible, apartment operators are foregoing rent growth in those properties closest to campus where pricing power has been steepest in recent years.
Rent growth through December came in at only 0.4% at the core 175 schools. For the same three-month period a year earlier, rent growth reached 1.5%, led by the steepest gains in those close-in properties.
Through December, properties within a half mile to campus grew rents a mere 0.3% from the year-ago rate. Though it’s still early in the pre-lease season, properties within a half mile to campus have gone from star performers in past years to a straggler amongst stragglers. In short, it’s hard to justify the expense of living close to campus in these uncertain times.
The pre-lease season is still too fresh to have a clear picture of which schools are yet pre-leasing winners and losers, but some trends are emerging. Flagship state schools are better pre-leased than most. Schools with high international student populations, heavy online learning components or a recent dump of new supply are struggling most to claim rent growth.