One Year In, Pandemic Still Looms Over Student Housing

As we round the first full year living through the COVID-19 pandemic, the student housing industry shows continued signs of lethargy compared to previous years.

As of February, 40.5% of beds at the 175 core universities tracked by RealPage had been pre-leased for the Fall 2021 academic year. That rate falls about 10% below February 2020’s rate – the last month before the pandemic took hold.

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February marks the halfway point in the pre-lease season not just in number of months, but typically in percentage of beds claimed. Sluggish readings thus far in the pre-lease season are likely due to several factors. Students could be taking a wait-and-see approach as universities flesh out Fall 2021 reopening plans. Universities could be taking cues from local and state regulations on mask mandates and large gatherings, or else keeping an eye on COVID-19 cases and vaccines in their area.

Universities lagging most in pre-lease rates as of February tend to be West Coast schools with a heavy virtual component. Pre-lease leaders tend to be in the South and other areas of the Sun Belt.

One trend has become more pronounced as the pre-lease season continues. Properties within a half mile to campus – which typically commanded the strongest rent growth and pre-lease rates before the pandemic – have begun to trail properties farther out.

Now, the minimal rent growth seen in this near-campus category since the pandemic slowed to marginal rent cuts in February. Properties within a half mile to campus are, on average, cutting rents 0.1% on an annual basis in February. That compares to 1.7% growth this time last year, and 1.8% the year before that.

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However, rent growth has all but stalled out across all distances. Properties within a mile to half mile to campus and properties over one mile from campus are both seeing a mere 0.3% annual growth as of February. Combined, total annual effective rent growth for Fall 2021 fell to 0.1% in February. In February 2020, that rate was 1.7%.