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Student Housing Rent Growth Softens in June

Student housing pre-leasing for Fall 2024 shows continued growth but at a slower pace than in previous years.
Suburban houses with shingled roofs and lawns, set against a grid-patterned purple and blue background.

Student Housing Rent Growth Softens in June

Student housing pre-leasing for Fall 2024 shows continued growth but at a slower pace than in previous years.

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Good morningStudent housing pre-leasing for Fall 2024 shows continued growth but at a slower pace than in previous years. Plus, Arbor Realty Trust is under investigation by the FBI for its lending practices.

Today’s issue is brought to you by Pine Peak Partners—be the bank with bridge debt and earn consistent cash flow.

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Market Snapshot

S&P 500
GSPC
5,615.35
Pct Chg:
+0.55%
FTSE NAREIT
FNER
757.17
Pct Chg:
+0.72%
10Y Treasury
TNX
4.225%
Pct Chg:
+0.039
SOFR
1-month
5.33%
Pct Chg:
0.0%

*Data as of 7/12/2024 market close.

STUDENT HOUSING

Student Housing Rent Growth Softens as Pre-Leasing Chugs On in June

Student housing pre-leasing for Fall 2024 shows continued growth but at a slower pace than in previous years.

Pre-leasing trends: As of June, pre-leasing rates at the 175 core universities tracked by RealPage stood at 84.5%, slightly down from 85.8% last year and 86.2% in 2022. Despite this, pre-leasing momentum grew by 6% from May to June, surpassing the typical summer slowdown.

Occupancy rates: Properties farthest from campus (over one mile) reported the highest pre-lease occupancy at just above 85%. Those within half a mile of campus matched the overall average of 84.5%. Properties located between half a mile to one mile from campus had the lowest, but still historically strong, pre-lease occupancy rate of 84%.

Rent growth: Annual effective rent growth across the RealPage 175 softened to 4.4% in June, marking the lowest rate seen this pre-lease season. Properties more than a mile from campus reported the strongest rent growth at nearly 6%, while properties within a mile of campus saw slightly lower rent growth rates.

➥ THE TAKEAWAY

Looking ahead: Despite a general slowdown, student housing pre-leasing and rent growth remain strong, especially for properties farther from campus, indicating a resilient demand in the sector. The University of Tennessee leads in student housing rent growth with over 25% year-over-year as of May, followed by over 10% growth at other campuses such as Ole Miss, University of Kentucky, Purdue, College of Charleston, and University of Arizona.

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✍️ Editor’s Picks

  • Rate cut rally: Real estate stocks soared as much as 3.1% Thursday, their biggest gain of 2024, driven by cooling inflation and expectations of Federal Reserve rate cuts in September.

  • DOJ probe: Arbor Realty Trust is under investigation by federal prosecutors and the FBI over its lending practices and loan portfolio performance following short-seller allegation.

  • Banking squeeze: Fed rate cuts may initially hurt banks by squeezing interest earnings amid rising deposit costs and slow loan growth before potentially boosting lending and earnings.

  • Historic sale: Miami’s nearly 100-year-old Dade County Courthouse is for sale at $52.3 million, marketed as an adaptive reuse project amid downtown redevelopment efforts.

🏘️ MULTIFAMILY

  • Policy changes: Starting Feb. 28, 2025, new multifamily mortgage loans from Fannie Mae and Freddie Mac will require a 30-day notice for rent increases, lease term expiration, and a five-day grace period for late rent.

  • Oversupply: Florida’s four biggest metro areas saw significant rent declines, with Jacksonville reporting the largest drop in median asking rent in five years.

  • Rent Cap: President Biden’s proposal to cap rent increases at 5% has sparked confusion and controversy, leading to speculation about a potential national rent control policy.

  • Workforce housing: Ron Simon donates $100M to build housing in Orange County through RSI Dream Communities, partnering with local employers to expedite development.

  • Managing expenses: Multifamily property owners are grappling with skyrocketing operational costs, particularly in insurance, utilities, and maintenance, threatening NOI.

  • Make it affordable: Atlanta Housing is exploring better collaboration methods with developers to create 10,000 affordable housing units within five years.

  • Conversion: Asana Partners and MRP Realty will convert Duke Energy’s former HQ in Charlotte into 448 apartments and 55,000 square feet of retail, with a $250 million investment.

🏭 Industrial

  • Warehouse sale: Darielle Singerman sold a Boca Raton industrial building for $18.7 million to investor Serge Abecassis, marking a significant return on her 2021 purchase price of $10.5 million.

  • Pullman Park: Ryan Companies secured $16.3M to develop a 170,000 sq ft industrial building in Chicago’s historic Pullman Park.

  • Fully leased: Bixby Land Co. and a global investment manager sold a fully leased, 104,500 sq ft industrial property in San Bernardino to Overton Moore Properties.

🏬 RETAIL

  • Going small: According to a new Colliers report, U.S. retail growth is mostly being driven by smaller tenants leasing stores in shopping centers.

  • Acquisition: Finmarc Management Inc. bought Riverview Plaza, a 185,275 sq ft shopping center in Frederick, Md., from EDENS and JPMorgan Chase & Co. for $30 million.

🏢 OFFICE

  • Doubling down: Boston Properties proposes increasing its office development at Reston Town Center from 645,000 to 930,000 square feet, aiming to capitalize on high-end office demand.

  • Special servicing: Brookfield’s $400M loan on LA’s Bank of America Plaza has moved to special servicing due to falling occupancy rates, ahead of the loan’s September maturity.

🏨 HOSPITALITY

  • Chicago Casino: Bally’s (BALY) has secured $940M in construction financing for a 34-story hotel tower at its Chicago casino project.

  • Trading hands: Hotel property trades surged from $4.3 billion in Q1 to over $5.7 billion in Q2, matching last year’s Q2 total, driven by key motivations for buyers and sellers.

  • Hiking fees: Oakland increases hotel fees to 2% of room rates to fund Visit Oakland’s marketing efforts, aiming to double revenue and boost tourism despite the city’s ongoing challenges.

📈 CHART OF THE DAY

Major U.S. markets have rebounded from pandemic job losses, with Dallas leading the way, adding over 343,000 jobs by May 2024, and Austin seeing an 18.6% increase, highlighting significant employment growth since February 2020.

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