Student housing properties set themselves apart from single-family rentals and conventional apartments close to universities by offering different leasing incentives. When looking to sign a lease, residents can be given the option of a giveaway, instead of rent concession. Properties offer giveaways to incentivize renters which, in turn, can help leasing velocity. They are also frequently offered to compete with new supply. These giveaways range from gift cards to cruises and concert tickets, but the amount being offered can be an indication of leasing results.
Based on Axiometrics data from November 2016 to May 2017, giveaways for new leases at student housing properties were offered nearly 1,500 times for the fall 2017 leasing season. Compared to the same period a year earlier, the number of times giveaways were offered increased by more than 600. This includes properties providing an option for a rent concession or gift card, along with raffles and giveaways for leasing specific bedroom types.
Some of this can be attributed to markets becoming more competitive, shifting focus from leasing faster to increasing rents, and the effect of new supply. Giveaways were not only being offered more frequently but earlier as well, which can be a result of properties leasing earlier and higher velocity at the beginning of the leasing season.
Leasing Velocity and Incentives
In previous years, leasing incentives occurred more frequently at the end of the leasing season, as the leasing pace begins to slow. For fall 2017, the number of giveaways picked up earlier and at different times (in December, February, March, then again in May). This coincides with the pattern for year-over-year leasing velocity. In March 2017, leasing velocity fell below last year’s pace – the same month that the number of new giveaways increased the most.
Leasing incentives have increased this year, but what type of incentive has been offered the most? Similar to previous years, gift cards have been most commonly offered. Specifically, gift cards priced between $101 and $250 were offered the most, while gift cards priced between $251 and $500 were the second most used. Other types of giveaways offered for the fall 2017 leasing season included cruises, TVs, GoPro products, Yeti products, concert tickets, Apple watches, and more.
Additionally, the value of gift cards tended to increase with the leasing velocity trend. The value of giveaway increased as leasing velocity slowed and the property was still trying to lease beds. This year, the number of gift cards worth more than $250 increased from February to March and became the most commonly offered giveaway in April and May. At the same time, the number of giveaways remained nearly flat from March to April and hundreds of properties weren’t offering giveaways at all.
The pace of leasing may be slowing and more giveaways are being offered, but prelease is still above fall 2015 levels and rent growth has remained positive for the fall 2017 leasing season, at 1.9%.