Student Housing Rent Growth Leaders in 2019 – So Far
As the 2019 pre-leasing season nears its end and college students throughout the nation prepare to move into student housing apartments, a few universities are standing out from their peers for rent growth.
Across the nation, student housing rents were up 1.7% as of June, essentially in line with 2018’s level of 1.6%. As usual, the universities commanding the strongest rent growth performance ran head and shoulders above the national norm.
Bowling Green State University in Bowling Green, Ohio moved up to claim the top spot this year, with 7.5% rent growth. However, that performance was a few ticks behind what the university saw in 2018 (7.9%). Strong enrollment growth at Bowling Green State in 2015 and 2016 boosted performance, coupled with the fact that no new product has been built here during the current cycle. This school has seen rent growth outpace the national norm every year since 2014 and is expected to continue to do so in the near term.
Like Bowling Green State, most of the schools on this list have seen little to no new supply of late, allowing existing properties to push rents. One outlier for this trend is the University of Nevada – Reno, which has experienced particularly robust performance (7% rent growth) as well as lots of new supply. By the time school starts in the fall, just under 2,000 beds are expected to have been delivered, but that’s nothing a school with healthy enrollment growth can’t handle. Its pre-leasing velocity is one of the highest in the nation, and the university has remained one of the top rent growth schools for four consecutive years. Outside the student housing market, Reno’s conventional apartment stock has also experienced strong fundamentals recently.
Another school with above average supply, Purdue University, will see more than 2,200 beds delivered this fall. Perhaps surprisingly, that new supply hasn’t affected recent performance, as Purdue ranks #10 for rent growth (5.5%) so far in 2019. Additionally, Purdue’s pre-lease velocity rivals the national norm.
Supply at Virginia Tech has been constrained since 2016, while enrollment growth has been strong for the last few years. Those two factors contribute to a near-full pre-lease performance and solid rent growth (6.2%). This fall, Virginia Tech will welcome its largest-ever freshman class after offering some students financial incentives to delay enrolling. The school’s class of 2023 had about 1,000 more students accept offers than initially expected, leading the university to offer students cash in exchange for taking a gap year or semester.
Auburn University, the school that took the top spot for rent growth in 2018 has not returned to the top 10 again in 2019. Other schools that fell of the list this year include University of Central Florida, San Diego State University, University of Nebraska – Lincoln and North Carolina State University.
Alternatively, most of the schools placing among the rent change laggards have generally seen – and struggled to absorb – large amounts of new supply. The list of universities seeing rent cuts includes schools suffering that supply hangover: University of Mississippi, Texas A&M University and Louisiana State University. Pre-leasing laggards include schools struggling with enrollment challenges, like Louisiana State University and the University of Missouri.
The RealPage 175 universities are, on average, 81.0% pre-leased as of June. A clear correlation is seen between strong pre-leasing and strong rent growth. Universities experiencing above-average rent growth have higher pre-leasing rates than rent growth laggards. And vice versa, schools with the strongest pre-leasing performance tend to boast stronger rent growth.