SEATTLE â The actual growth in rents and the year-over-year variation in rental speed are key indicators of the health of a university market. The explosive growth in rents and the lack of impact on rental speed illustrate the solid fundamental health of many of the top performing universities and the student housing that surrounds them.
Overall growth in student housing rents in the United States has squeezed from 1.8% last fall to 1.4% this fall, but the range between many universities and individual working people is still wide. Spikes in new supply or imbalances in supply and demand have led to a moderation in performance this rental season at many universities. But a steady stream of new offering and stable to strong enrollment growth has contributed to better results for others.
New data from property management software provider Real page revealed the best universities for rent growth in 2018. Of the 120 universities assessed, 63% show rental rate growth above the national average and nearly 30% of them have growth rates of 4% or more. At the same time, 50% of universities experienced a drop in rental speed from year to year.
While the best performing schools are fairly dispersed across the country, there are regional performance trends. The Midwest and Southwest have a higher percentage of universities with a negative rent change. In the South West, this is due to the amount of new stock delivered in recent years. In the Midwest, this is due to declining enrollment at some universities and continued growth in inventories.
The Mountain West and Pacific Northwest regions are seeing a large portion of universities achieve above-average rental growth. This is mainly due to a limited supply and high demand. GlobeSt.com has learned that off-campus student housing near Washington University costs an average of $ 1,098 per bed this fall, up 2.7% from a year ago. Rents average between $ 840 and $ 1,470 per bed and the average pre-rental was 82% in June, up from over 96% in June 2017, according to the study.
âThese rents are considered the best in the market compared to the national average (around $ 650 per bed) and compared to the more mature student housing markets. However, this is what we would expect in an urban college setting, âTaylor Gunn, director of student housing for Axiometrics, a RealPage company, told GlobeSt.com. âWe are seeing similar rent levels in Chicago, Atlanta, Philadelphia and Pittsburgh. In addition, the majority of the purpose-built park off-campus at the University of Washington was built between 2014 and 2017, which may also contribute to the price hike.
Among the top performers in rent growth, Auburn University ranks first with an average rental rate increase of 8%. This is above the three-year average of 5%. Intermediate prices and moderate supply growth versus the growth in enrollment of 2,700 off-campus beds versus the growth in enrollment of 4,700 students since 2011 have helped Auburn properties increase rents while continuing to absorb beds.
At number two Bowling Green State, no new offers during this cycle, coupled with low prices – below $ 400 per bed – have kept rent growth high in recent years. Rental rates have increased an average of 5.5% over the past three years and are currently above that level at almost 7.9%.
Northern Colorado’s third-largest university (6.4%) also had few new offerings, but stronger enrollment growth in 2016 and 2017 helped drive rental rates above the three-year average by 1.3%.
The University of Nevada-Reno remained one of the fastest growing universities in rents for three consecutive years. However, the growth rate in Reno moderated from an average of 9% over three years to 5.8% this fall, which placed the university in fourth place. Few new offers and steady growth in registrations will help student properties continue to push up rates.
Virginia Tech at number five and the University of Nebraska-Lincoln at number eight are the only universities to report a drop in rental speed year over year. Virginia Tech has remained one of the top performers in terms of pre-market and rental growth for several consecutive years.
The University of Nebraska-Lincoln has a different history. The substantial growth in inventory during this cycle – an increase of over 200% – caused the market to slow as existing properties struggled to be absorbed. But, the market has since started to recover and perform above average. For both universities, limited supply and positive growth expectations will play a role in sustaining absorption.
San Diego State, number seven on the list, has the highest effective rent of any university on the list, averaging over $ 800 per bed. This price is not abnormal for the region, but the 5% growth rate is higher than what many other universities are reporting. This can be attributed to strong enrollment growth and a minimal supply in the market, which captures less than 30% of existing students, the report says.