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Rent Gap Varies Between Purpose-Built Student Housing and Student Competitive Properties

POSH Costs Higher in Some Smaller Metros

By Taylor Gunn | Thursday, October 19, 2017

 

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.


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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.


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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.

Taylor Gunn

Taylor Gunn

Director of Student Housing

Taylor Gunn, Director of Student Housing for Axiometrics, a RealPage company, oversees all student housing analytics for the company. Gunn has helped the company drive further industry focus and market penetration through a specialization in student data quality and analysis. Her passion for student housing has driven her to become an advocate for the industry, an in-demand student housing source for business and real estate media, and a regular presenter at industry and business conferences.

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