Off-campus student housing is one of the hottest assets for commercial investors right now. This despite the uncertainty introduced by a year of distance learning. With other asset classes facing an even more precarious future (malls, hotels and offices in particular), the risks of student housing don’t seem so pressing as investors look to strengthen their portfolios.
Rapid rent recovery
One of the best signs of student housing being a sound investment has been the quick recovery of year-over-year rents. After dipping to an anemic 0.6% in March of 2021, they doubled a month later to 1.2%.
Meanwhile, new construction hasn’t slowed much. At the 200 universities monitored by Yardi Matrix, 12,000 bedrooms were delivered in 2020, close to 2019’s 13,000.
Eastern college towns earning top marks
In general, college towns in the eastern half of the United States have been seeing the best preleasing numbers for student housing. Texas, Tennessee and Alabama all have multiple markets that have seen year-over-year preleasing growth of 6.7% to 12.4%. Recent deals and developments in these markets include the Texas A&M Life Tower (714 beds), an unnamed project in Knoxville (700 beds) and the Marshall Birmingham (409 beds).