According to the Yardi Matrix Fall 2024 student housing report and webinar, the strong getting stronger is an emerging theme among the Yardi 200. Yardi tracks the performance of 1.15 million student housing beds at more than 2500 universities, including schools in 49 of the 50 states.
The theme begins with the Power Four schools outperforming on preleasing, reaching 94.9 percent occupancy versus 92.4 percent for all other universities. Power Four schools also saw stronger preleasing early in the leasing season, while non-Power Four schools saw preleasing trending much more in line with previous years.
Rent growth among the Power Four followed a similar trend, with trailing 12-month rent growth of 7.1 percent versus 4.4 percent at non-Power Four schools.
Primary state schools also beat out private schools and tertiary market state schools on preleasing and occupancy this year, more evidence of the strong getting stronger. Primary schools reached 50 percent preleasing by December, while private schools and tertiary market state schools saw the slowest preleasing trends and lowest occupancy.
This trend is consistent with enrollment growth over the past few years, as primary state schools have been able to grow more aggressively than their peers by keeping tuition costs low and accepting more students.
However, as enrollment patterns shifted over the past several years, the more expensive private schools that were outperforming just a few years ago are seeing the biggest drop in occupancy.
For example, the largest private school market in the largest private school student housing market in the country, the University of Southern California, has struggled the past few years with a large pipeline, late deliveries and flat or declining enrollment.
Following another trend, Black primary state schools that experienced the strongest preleasing in 2023 and 2024 have been able to push rents the fastest for the second year in a row, with trailing 12-month rents up 7.6 percent for Fall 2024, followed by secondary state schools.
The presentation points out this is an important trend to watch as schools compete with each other for fewer high school graduates. In many states, primary state schools have the advantage in attracting high school graduates, which could lead to further outperformance.
The presentation also highlights the difficulty preleasing a new student housing property under construction, especially without being able to show the property to prospective residents. Preleasing among new properties nationally in January was only 30 percent compared to 50 percent for existing properties.
While there have been fewer late deliveries this year than last, occupancy for new properties only reached 84.8 percent by Fall 2024, better than last year, but still below Fall 2021 and 2022, partially as a result of skyrocketing rents in newly delivered properties.
Not only do new properties have the highest rents in the market this year, averaging more than $1,200 per bed, they usually are untested.
Yardi Matrix Fall 2024 webinar and report is available here.
