Summer 2016 Student Housing Newsletter

Industry News

Market Reporting that Matters

Summer 2016 Student Housing Newsletter

Students Returning to Strengthening Sector

Thursday, July 28, 2016

The student housing sector has continued its strong performance during the Fall 2016 leasing season, which is nearing its end as move-in is just a few weeks away. Annual effective rent growth for privately owned, purpose-built properties is higher than previous years, leasing velocity is in line with last year’s record pace and few delays have been identified so far.

Some 47,700 new beds are expected to be delivered by the time students arrive for the coming fall semester. Once again, Southeast Conference (SEC) schools dominate the list of universities with the most incoming supply, providing six of the top 10.

Looking ahead one year, Axiometrics has identified 43,800 new beds to be delivered for fall 2017, including a 792-bed project near Texas A&M University that was originally scheduled to open this year. Of those 2017 deliveries, 14,400 are still in the planning stages.

Three Texas schools are among the 10 universities with the most identified off-campus supply in 2017, with only three SEC schools on the list to date.

As mentioned above, more than 47,000 beds are expected to deliver next month and 43,800 are being tracked for 2017 delivery. These numbers are below the peak figures seen a few years ago, but a small increase from Fall 2015.

Sector Provides Great Performance

By all measures, student housing properties are showing strength in the market, as the sector continued to mature.

  • Nationally, average rent was $618 per bed per month for the Fall 2016 leasing season.

  • Annual effective rent growth was 2.3% through June, above the 2015-16 average of 2.0%. Properties are pushing rents and still maintaining leasing velocity.

  • Properties located less than one-half mile from campus recorded an average rent of $672, a premium of $54.

  • Annual effective rent growth for properties located less than one-half mile from campus was 2.3% for Fall 2016.

  • Average rent at properties located between one-half mile and one mile from campus was $553.

  • Rent growth of 2.7% for those properties was above the overall average, suggesting higher demand for less expensive – but still well-located -- properties.

  • Properties located more than one mile from campus charged an average of $537 per month to its residents.

  • Rent growth, however, was below the overall rate, at 1.7%.


  • Leasing velocity is leveling out year-over-year. Student housing properties were 83.4% leased as of June 2016, up 15 bps from June 2015.

The Top 4 and Bottom 4 Markets

The university markets with the highest and lowest annual effective rent growth nationwide are varied, as shown in the table below.


The strongest university markets are not necessarily those with the most new supply, nor necessarily the largest universities. While the following schools might not have Power 5 athletic programs or the most degree offerings, their student housing is showing the strongest performance for owners and investors.

Kent State University

Kent State University had the highest annual effective rent growth for Fall 2016 based on same-store purpose-built properties. The average Kent State rent was $653 per bed, up 11.6% from last fall.

Properties have been pushing rents, and with little purpose-built supply in the market, leasing velocity has remained strong at 97% (based on June 2016 data). This is a 187-basis-point (bps) decline from June of 2015, but that decrease was driven by underpeformance of one property that is farther from campus than others and offers a different utility package.

Fewer than 300 new beds have been identified for 2016 delivery, after none came to market in 2015.

University of Nevada – Reno

Off-campus properties at the University of Nevada – Reno had the second-highest rent growth for Fall 2016 at 10.2%, based on the current average rent of $558 per bed.

On the other hand, the market’s prelease rate was 250 bps lower than last year’s as of June, again because of one underperforming property located across from a new development. However, the market’s prelease rate overall is trending above the national level.

Northern Arizona University

Northern Arizona University’s 7.1% Fall 2016 effective rent growth was the nation’s third highest, and the school’s leasing velocity was among the nation’s highest.

The average rent at privately owned properties near NAU was $718, some $100 more than the national average.

Additionally, properties are 100% leased for the second year in a row.

The university has seen strong enrollment over the past 10 years, averaging 1,025 new students per year (4.5% growth), and on-campus housing has averaged above capacity the past three years. This has helped drive strong results for the off-campus properties.

Virginia Tech University

The 7.0% Fall 2016 rent growth at Virginia Tech University was No. 4 nationally and, like Northern Arizona, the school’s off-campus housing is fully preleased for the coming semester.

Rents at properties near Virginia Tech averaged $603 per bed, and the 100% prelease rate means no concessions needed to be offered.

Enrollment has increased moderately over the past 10 years, averaging 1.6% growth per year since Fall 2006. However, the increase of more than 1,400 students in 2015 contributed to the strong performance at purpose-built properties in the area.

On the other end of the spectrum are university markets that aren’t performing so well, especially compared to the previous year.

Minnesota State University – Mankato

Leasing velocity at Minnesota State University’s Mankato campus declined 480 bps from June 2015 to 88.4% in June 2016. Add this to the -5% effective rent growth, and the effects of four years of flat-to-declining enrollment can be seen.

The rent-growth decline can also be attributed to the concessions offered by some properties to encourage leasing.

This university hasn’t seen new off-campus supply delivered since 2004.

University of Louisville

The University of Louisville also ranked one of the lowest in terms of annual effective rent growth, at -5.6%, based on the average Fall 2016 rent of $610. These properties are offering gift cards and/or rent concessions, which is helping boost leasing velocity.

In fact, Louisville’s 75.7% prelease rate as of June 2016 represents an increase of more than 600 bps from one year earlier.

A total of 2,068 off-campus beds were delivered to the market in the past 2 years, with 917 more expected this year. This amount of supply, coupled with flat to negative enrollment growth in 2014 and 2015, has played a role in student housing properties’ performance.

Michigan State University

Michigan State University’s -6.4% annual effective rent growth for Fall 2016 ranked second to last nationwide. The average rent was $575 per bed.

In addition, the 87% leasing velocity in June 2016 was down more than 1,200 bps from June 2015, when just a smattering of beds were not preleased.

New supply has been delivered each year since 2013, totaling 1,560 beds from 2013-2016, with 2,900 additional beds planned for 2017 delivery. The amount of new supply is having an impact on existing properties in the market.

University of Delaware

At -9.7%, the University of Delaware had the lowest Fall 2016 annual effective rent growth in the nation, with the average rent falling to $747 per bed.

The June 2016 prelease rate of 89.1% was down one percentage point from June 2015, but is still above the national average of 83.4%.

Some 440 beds are expected to deliver this fall, with 531 more beds anticipated for Fall 2017.

The university’s enrollment growth since 2007 has been positive, which has attracted new development. It’s the older assets in the market that are struggling to keep up. 


A Peek at the Future

Axiometrics recently released its Student Housing Supply-Demand Model and Updated Forecast, and the prediction is that the sector will continue its trend of strengthening over the next five years. 

Combining privately owned, purpose built properties with student competitive conventional apartments in the Axio 175 student housing markets, Axiometrics expects annual effective rent growth to increase from 2016 to 2021, with occupancy remaining relatively stable in the mid-95% range.

Forecasts for 175 universities are available to Axiometrics student housing clients on AXIOPortal®. With the release of the new Supply-Demand Model and Updated Forecast, we have added 15 universities to our forecast list.

They are:

  • University of California - San Diego
  • Georgia State University
  • University of Louisville
  • University of Massachusetts - Lowell
  • Missouri State University
  • New Mexico State University
  • University of Toledo
  • Wright State University
  • University of Oregon
  • Lehigh University
  • University of Tennessee - Chattanooga
  • Texas A&M University - Corpus Christi
  • Brigham Young University
  • Virginia Tech - San Marcos
  • University of Wisconsin - Milwaukee

Javascript is not enable. This may affect content rendering. You can enabled Javascript in your Settings Menu.