Pedestrian Properties Still Command Premium in Student Housing
The global pandemic caused several new performance patterns in student housing. Among them was that properties farthest from campus outperformed their more proximate counterparts for longer throughout the recent rent growth boom.
That ultra-high rent growth began to moderate earlier this leasing season. While still historically strong, rent change is softening back toward more typical levels. Still, when examining how that growth altered performance patterns across distances, the impact appears minimal.
That is to say, properties closest to campus still command approximately the same price premium as they have over the last several years. And properties farthest from campus still command the relative bargain amongst distances.
Across distances, rent growth at pedestrian properties – meaning, properties within a half mile of campus – began to moderate the earliest, dipping below 8% annual effective rent growth in October 2023. Annual rent growth at properties within a half mile to one mile of campus dipped below 8% a month later in November. Properties more than one mile from campus, meanwhile, continued to record strengthening rent growth during that time, peaking at 9.3% annual effective rent change in November and then sipping below 8% several months later in March.
As of July, rent growth at properties more than one mile from campus clocked in at 5.4%, compared to 4.8% at properties within a half mile to one mile of campus and 3.4% at pedestrian properties. Across all distances, annual effective rent growth among the core 175 universities tracked by RealPage hit 3.9% in July.
On a dollar basis, however, performance patterns across distances look similar today as they did before the pandemic.
As of July 2024, pedestrian properties commanded approximately a 9% premium to total rents, which is a similar delta to what was seen July 2019 (9.5%). Properties more than one mile from campus command approximately a 19% discount to total rents in July 2024. This was a bit more of a discount than what was seen in 2019 (16.4%).
The average student housing rent per bed per month registered at $913 in July. At beds within a half mile of campus, that rate was 8.8% higher at $993. In beds more than one mile from campus, monthly rent averaged $741, which was 18.8% cheaper than the norm. Beds within a half mile to one mile of campus averaged monthly rent of $780 in July, which was 14.6% less than the average.
