Student Housing Luxury Losing Appeal – CEO Says
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Student Housing Market Cools as Economic Concerns Rise
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Rent growth slows significantly in July, with average asking rent falling for the first time this year. Experts attribute the shift to economic anxieties and a reassessment of value by students and parents.
What’s happening in Student Housing?
The student housing market,previously a high-growth sector,is experiencing a slowdown. According to a July report by Yardi, rent growth across 200 colleges slowed to just 0.9%. The average advertised asking rent fell to $905 per bed, a 1.4% decrease from the $918 peak in March. This marks a meaningful change from previous years, where rent growth averaged 2.8% from October through july, less than half the 5.7% recorded during the same period last year, and considerably lower than the 6.9% seen the year before.
Why is This Happening?
robert bronstein, founder and CEO of Scion, one of the largest student housing owners and operators in the US (managing over $10 billion in assets across 83 schools and 95,000 beds), attributes the slowdown to a shift in consumer behavior driven by economic concerns. He notes a “fall-off at the top and the bottom” of the market.
students and families who were previously struggling to afford student housing are returning to more affordable rental options further from campus. Simultaneously, even higher-end students and parents are reconsidering the value proposition of luxury amenities.
I think that people are saying, ‘You know what, there’s a building that’s three years old, and it costs 30% less than a brand new building, and I wasn’t going to use the hot tub on the roof anyhow. I’m going to go with the less expensive option.’
who is Affected?
This slowdown impacts a wide range of stakeholders:
- Student Housing Owners/Operators: Like Scion, face challenges in filling inventory and maintaining previous rent growth rates.
- Investors: May see reduced returns on student housing investments.
- Students & Families: While potentially benefiting from lower rents,may have fewer options or need to compromise on location or amenities.
- Universities: Could see impacts on on-campus housing demand and potentially student enrollment.
Timeline of Recent trends
| Period | Rent Growth (%) |
|---|---|
| October – July (2023) | 2.8% |
| October – July (2022) | 5.7% |
| October – July (2021) | 6.9% |
| July (2023) | 0.9% |