Rent Gap Varies Between Purpose-Built Student Housing and Student Competitive Properties
While the student housing market continues to grow, several universities still lack purpose-built student housing. So, many students turn to alternative housing options such as conventional market-rate apartments, also known as student-competitive properties. Axiometrics, a RealPage company, defines student-competitive properties as “conventional properties that lease by the unit, but are located within three miles of a university.”
Given that these can be housing options for students, we examined the pricing of these properties across a few markets.
Effective Rent Comparison (September)
Similar to findings reported last year, after examining how comparable these properties truly are to purpose-built student housing, Axiometrics student housing surveys found that monthly effective rent in September at student-competitive properties averaged $330 more on a per-bed basis. This could result from student-competitive properties’ propensity to include more studios and one-bedroom apartments in their unit mix, while purpose-built properties have more three- and four-bedroom units.
Student-competitive properties were built, on average, in 1988, compared to 2003 for the student housing properties. Student housing properties are also located closer to campus, averaging a half-mile from campus relative to more than 1½ miles for student-competitive properties, according to the student housing surveys. But keep in mind, student housing properties tend to include furniture and other utilities within the rent. Student-competitive properties haven’t been adjusted to include furniture and/or utilities.
While, on average, student-competitive properties achieve higher effective rents per bed than purpose-built student housing properties, this varies by university. We examined 20 universities that had the largest differential between student-competitive and student housing properties. The universities seen in Chart 1 and Chart 2 illustrate opposite trends.
Chart 1 highlights universities where student-competitive properties are priced above the student housing properties. Chart 2 highlights universities where student-competitive properties are priced below the purpose-built projects.
Rents at student-competitive properties at the universities in Chart 1 averaged more than $1,000 per bed in September and were built, on average, in the ‘90s. These properties averaged between $1,105 and $1,918 per bed and recorded rent growth of 2.1% from September 2016 to September 2017. The student housing properties at the same universities averaged between $781 and $1,256 per bed and recorded 2.7% rent growth from September 2016 to September 2017, the student housing data found.
The University of Southern California had the largest differential between student-competitive and purpose-built properties: An average of $870 more per bed. Several other California schools also were among those with the highest differential. The University of Houston recorded the smallest difference among this group, with student-competitive properties averaging $280 more per bed than the student housing properties.
Many of the universities in Chart 1 are located in large urban areas – three of the 10 schools on the chart are in Philadelphia — so there tends to be more high-rise projects and a higher concentration of jobs. Those attributes lead to higher-priced properties.
On the other hand, rents at student-competitive properties at the universities in Chart 2 averaged less than $800 per bed and were built, on average, in the ‘80s. Student housing properties at these universities averaged between $563 and $1,090 per bed. The student-competitive properties averaged between $362 and $781 per bed, though both property types achieved the same year-over-year rent growth of 1.8% for September, the student housing surveys found.
Syracuse University had the largest differential between the two types of properties, averaging $442 less per bed. The University of Akron and the University of North Carolina had the smallest differences, with student-competitive properties averaging almost $200 less than the purpose-built student housing properties.
However, the universities in Chart 2 are mostly located in smaller urban, suburban and even rural areas, where garden and mid-rise properties are more common and the population consists largely of students.
The difference in price between purpose-built student housing properties and student-competitive apartments depends on the university and type of campus setting, as well as other factors.