Off-Campus Student Housing Rents Near Historic High

School is back in session and its related housing sector is scoring all-time top marks.

Off-campus student housing rents across the United States are approaching a record high, the Commercial Observer reported. The finding comes courtesy of a report from Yardi Matrix, which analyzed nearly 900,000 beds in proximity to 200 universities, looking exclusively at privately held off-campus housing built for student use.

Average monthly rent per off-campus student housing bed was $846 last month, according to Yardi. Year-over-year rent growth rose more than 6 percent and the report predicted this school year will feature “record-high rents” in the sector.

Off-campus housing owners are boosting rental prices through pre-leasing, having students reserve units before they even come to market, giving landlords greater control over prices.

Over 95 percent of the beds analyzed in the report were pre-leased; 56 percent of the markets had a pre-leasing rate of at least 99 percent. The University of Southern Mississippi saw 19.1 percent year-over-year growth in pre-leased off-campus housing, the biggest jump of any market.

Owners near large universities are seeing some of the biggest rental gains. There were 33 markets with double-digit rent growth annually in September 2023, including markets tied to Purdue, Arizona State, Clemson and University of Georgia.

Student housing has been a Dean’s List-caliber sector for commercial real estate at a time when other sectors are in danger of being placed on academic probation. Rents have surged at popular universities, easily outpacing rent gains seen in the multifamily sector.

Last year, limited supply and high demand helped fuel a record $22.9 billion in sales of student housing properties, according to CBRE. After campuses became ghost towns during Covid, pent-up demand post-pandemic helped spur the market last year, but investors are betting on continued growth. Blackstone, for instance, acquired American Campus Communities last year for $12.8 billion.

— Holden Walter-Warner