The student housing sector starts the school year in a strong position, as preleasing matches last year’s solid performance and year-over-year rent growth has continually outpaced 2022’s historic growth. Student housing is one of the few real estate sectors to be continually resilient post-pandemic, according to the latest National Student Housing Report from Yardi® Matrix, which is now available for download. You can also join the upcoming Student Housing Webinar with Matrix experts on Oct. 25 and gain more in-depth insight. As of August 2023, 94 percent of beds at Yardi 200 universities were preleased, a 3.3 percent increase from the prior month and 0.2 percent behind August 2022. Rents remained flat in August from July at $845 per bed, but year-over-year rent growth of 6.9 percent in August was still well above the historic average for the sector. “As we enter the 2023-2024 school year, student housing preleasing matches last year’s solid trend and year-over-year rent growth has continually outpaced last year’s historic growth, as well as other property sectors,” say Matrix analysts in the new report. “The sector is in prime position to weather a potential recession, with counter-cyclical demand patterns and solid occupancy and rent growth baked in for the 2023-2024 school year.” Strong fundamentals continue to fuel development, and Matrix projects approximately 40,000 new beds to deliver in fall 2023 at Yardi 200 universities, compared to the 27,000 delivered in fall 2022. Solid preleasing and rent growth suggest that much of the new supply has already been absorbed. Read more findings from the latest student housing report. The student housing data set includes over 2,000 universities and colleges nationwide, including the top 200 investment grade universities across all major collegiate conferences. Known as the “Yardi 200,” it includes all Power 5 conferences as well as Carnegie R1 and R2 universities. Yardi Matrix offers the industry’s most comprehensive market intelligence tool for investment professionals, equity investors, lenders and property managers who underwrite and manage investments in commercial real estate. Yardi Matrix covers multifamily, student housing, vacant land, industrial, office, retail and self storage property types. Email [email protected], call 480-663-1149 or visit yardimatrix.com to learn...

Multifamily performance was stable in August, according to the latest Yardi Matrix National Multifamily Report. The average U.S. asking rent rose $1 to $1,728, while year-over-year growth fell to 1.5 percent, down 20 basis points from July. Occupancy was also effectively flat. “Economic growth continues to be stronger than expected, providing a backdrop to consistent multifamily demand. U.S. asking rents rose slightly in August, while occupancy rates remained strong at 95 percent,” states the report. These trends and much more will be discussed Sept. 20 in a multifamily-focused webinar with Matrix experts Jeff Adler and Paul Fiorilla. Sign up here to join live or receive the post-event recording. In the short term, supply remains a driving factor in rent growth. Most metros with the highest year-over-year asking rent growth, such as New York, Chicago, Indianapolis and San Diego, have weak new development pipelines. Single-family rents dropped back in August, down $6 nationally to $2,104. Year-over-year, national SFR rent growth fell 70 basis points to 0.5 percent. According to the report, some 190,000 multifamily units have been absorbed in the U.S. through July. That figure is below the record-setting year of almost 600,000 in 2021 but is otherwise a healthy pace. Among the top 30 Matrix metros, absorption in absolute numbers in 2023 has been led by Washington D.C., Phoenix, Miami, Chicago and Denver. As a percentage of stock, Charlotte, Tampa and Nashville are among the metros that have performed the best so far in 2023. Gain more insight in the new Yardi Matrix National Multifamily Report. Yardi Matrix offers the industry’s most comprehensive market intelligence tool for investment professionals, equity investors, lenders and property managers who underwrite and manage investments in commercial real estate. Yardi Matrix covers multifamily, student housing, industrial, office and self storage property types. Email [email protected], call (480) 663-1149 or visit yardimatrix.com to learn...

Self storage performance slumped in the second quarter of 2023, typically the strongest quarter, due to weak demand. That was among the top takeaways from a Thursday webinar hosted by industry leading data provider Yardi Matrix. You can view the webinar recording and presentation materials here. Among other key takeaways for the sector: Street rate growth continues to decelerate, as same store rates were down -4.6 percent in July One bright spot: operators were able to grow revenue by increasing existing customer rents (ECRI) The amount of new supply under construction Is moderating and likely won’t return to normal until 2025-2027 Investment activity is drastically reduced, with two notable exceptions (read on for details) “We’re in a kind of a 2017-2019 kind of world, where revenue growth is really off the back of ECRIs versus street rents,” said Jeff Adler, vice president of Yardi Matrix, during the webinar.  Reasons that demand has dropped included the challenging single family real estate market, with interest rates for new purchases around 7 percent, and diminished mobility of American households post-pandemic. “Lower street rates are a result of weak move-in activity, with average REIT occupancy in Q2 2023 down 400 basis points from its all-time peak in Q2 2021,” states the latest self storage report. In July, overall national street rates (all unit sizes and types combined) dropped $1 to $141, down 0.7 percent month-over-month. Historically, rate growth is positive in July, averaging a sequential increase of 0.8 percent in the past seven years. While an anticipated recession has yet to fully materialize, Adler still expects that one will be in place by the end of the year, due to a lag time between Federal Reserve actions and the ultimate impact on the real economy. “We’re still in this period of time where you’re seeing strong economic growth, but we are seeing the beginning of the signs of a slowing trend,” Adler said. Self storage demand has historically been resilient, coming from a variety of sources, and growth rebounds quickly following a downturn due to month-to-month lease terms and flexible customer rate increase programs. But investor increased in the sector has also taken a hit in 2023, with two notable exceptions. Extra Space merged with competitor Life Storage in July. The combined company is now the largest storage operator in the country (based on the number of self-storage locations) with over 3,500 locations, approximately 270 million square feet of rentable storage space, and more than two million customers. Public Storage also announced last month that it has entered an agreement to acquire Simply Self Storage for $2.2 billion. According to the announcement: “The portfolio comprises 127 wholly-owned properties and 9 million net rentable square feet that are geographically diversified across 18 states and located in markets with population growth that has been approximately double the national average since 2018.” Aside from those significant moves, sales and M&A activity have plummeted, said Tyson Huebner, director of institutional research for Yardi Matrix. “It should be no surprise that transaction volume thus far this year has really fallen off the cliff. The number of properties sold in the first half of 2023, which doesn’t include those two portfolios, was down 56.6% from the first half of 2022,” Huebner said. Gain additional insights on self storage and the economy by checking out the entire...

Although its pandemic-driven expansion has been tempered recently by rising mortgage rates and cooling home sales, the U.S. institutional single-family rentals (SFR) industry has entered a moderate growth mode that positions it “to thrive over the long term,” according to a new research bulletin from Yardi Matrix. Robust household family formation and elevated demand for family and home office space during the pandemic sparked a run-up of SFR rents, which increased by 27.9% from January 2020 to mid-year 2023. Occupancy rates have remained above 95% since January 2018. But rent increases slowed and year-over-year rent growth decelerated in the first half of 2023. The Federal Reserve has increased short-term interest rates by 525 points since spring 2022 and institutional SFR acquisitions have declined after two years of record volume. Despite this, “demand for single-family rentals is almost certain to remain firm,” with the sector having “solidified its presence as a niche segment of the overall commercial real estate market,” the bulletin says. The extent of the sector’s growth will depend on how well owners and investors succeed in financing acquisitions and developing efficient property management strategies. Nashville, Tenn., had the strongest year-over-year SFR rent growth at mid-year, followed by Baltimore and Chicago. The weakest metros for rent growth were Orlando, Fla., Miami and California’s Inland Empire. There’s much more insight into the SFR market in the August 2023 Yardi Matrix Bulletin, including an examination of fundamental drivers, a discussion of proposed legislation regarding institutional SFR purchases, a review of acquisition growth trends and reports on regional stock deliveries.  Download your...

The student housing sector continues to outperform as the Fall 2023 school year approaches, according to the August National Student Housing Report from Yardi Matrix. Reports on national student housing performance, with insight on preleasing and rental rates, are now being delivered on a monthly basis. As of July, 90.1 percent of beds at Yardi 200 universities were preleased for the upcoming fall term, a 4.6 percent increase from the prior month and about even with last year. Preleasing was near a record high for July, and year-over-year rent growth throughout the leasing season has been ahead of last year. The sector is equipped to handle economic challenges, with solid occupancy and rent growth for the 2023-2024 school year and counter-cyclical demand. “Preleasing has slowed recently from rapid growth at the beginning of the leasing season. Month-over-month rent growth has also decelerated,” states the report. Despite the drop, fall occupancy is projected to match last year at around 96 percent, while rent growth remains impressive at 7.1 percent year-over-year. Strong fundamentals continue to fuel development, and Yardi Matrix projects approximately 40,000 new beds will be delivered in Fall 2023 at Yardi 200 universities, compared to 27,000 delivered last fall. Solid preleasing and rent growth suggests that much of the supply has already been absorbed. The student housing data set includes over 2,000 universities and colleges nationwide, including the top 200 investment grade universities across all major collegiate conferences. Known as the “Yardi 200,” it includes all Power 5 conferences as well as Carnegie R1 and R2 universities. Gain more insight in the latest Student Housing Report. Future reports will include a rotating special topic such as enrollment trends, transaction volume or development activity. Yardi Matrix covers multifamily, student housing, industrial, office, retail, vacant land and self storage property types. Email [email protected], call (480) 663-1149 or visit yardimatrix.com to learn...

Responding to moderating demand, self storage street rates remained healthy through the second quarter of 2023, according to the latest National Self Storage Report from Yardi Matrix. Nationally, the average rate for self storage units overall remained unchanged month-over-month. Historically, rates tend to increase in the summer months. With the exception of 2019, every year from 2017 to 2022 experienced a May-to-June rent increase of at least 0.7 percent. “Muted monthly rate growth this year may signal that move-ins are slowing this leasing season as demand cools,” say Matrix analysts. “Move-in activity has slowed this year as home sales have cooled, especially compared to the robust home sales in early 2022.” In June, national street rates for 10×10 NON CC units decreased 3.8 percent year-over-year. Rates for 10×10 CC units fared worse, falling 5.3 percent year-over-year, the largest recorded decline since May 2020. Annual street rate growth continued to be negative for almost all of Yardi Matrix’s top 31 metros in June. Street rates for 10×10 NON CC units were down year-over-year in 97 percent of the top 31 metros. Learn more about the state of the self storage sector nationwide. Yardi Matrix tracks a total of 4,751 self storage properties in various stages of development, including 810 under construction, 1,913 planned, 622 prospective, 1,353 abandoned and 53 deferred. Matrix also maintains operational profiles for 29,824 completed self storage facilities across the United States, bringing the total data set to 34,575. Yardi Matrix offers the industry’s most comprehensive market intelligence tool for investment professionals, equity investors, lenders and property managers who underwrite and manage investments in commercial real estate. Yardi Matrix covers multifamily, student housing, industrial, office and self storage property types. Email [email protected], call (480) 663-1149 or visit yardimatrix.com to learn...

The student housing sector continues to record strong rent growth and preleasing performance is up slightly over 2022, according to the latest National Student Housing Report from Yardi Matrix. As of June, 86.6 percent of beds at Yardi 200 universities were preleased for the upcoming fall term, a 5.2 percent increase from the prior month. June also marked the fifth consecutive month of annual rent growth over seven percent at Yardi 200 universities, at 7.2 percent. Given that 2022 held the previous rent record for student housing, obtaining more than seven percent growth off of previous record-high numbers is exceptional. The average rent per bed at Yardi 200 universities was $846 at quarter-end, a new all-time record. “Under the surface of solid overall fundamentals at the Yardi 200 level is mixed performance at individual schools, as some universities are doing exceptionally well while others fall short. Performance at the university level is mainly correlated to local supply-and-demand dynamics rather than higher-level trends,” state Matrix analysts. The student housing data set includes over 2,000 universities and colleges nationwide, including the top 200 investment grade universities across all major collegiate conferences. Known as the “Yardi 200,” it includes all Power 5 conferences as well as Carnegie R1 and R2 universities. However, the sector isn’t totally unscathed by current economic conditions. Transaction volume through the second quarter was down about 73 percent from the same time last year, a stark reminder of weakening economic sentiment. But that hasn’t slowed the off-campus dedicated student housing development pipeline, which expanded by approximately 28,000 bedrooms since January. Gain more insight in the latest Student Housing Report. Yardi Matrix covers multifamily, student housing, industrial, office and self storage property types. Email [email protected], call (480) 663-1149 or visit yardimatrix.com to learn...

Multifamily asking rents grew another $7 last month, on average, but year-over-year growth fell to 1.8 percent, according to the latest Yardi Matrix National Multifamily Report. That’s down 70 basis points from May. Rents are buoyed by ongoing strong demand for units. Though down from the 2021 highs, occupancy rates are steady at 95 percent. The average asking rent was $1,726 in June. “Rents are growing within a normal seasonal pattern, albeit well below the post-pandemic boom and even below pre-pandemic trends,” say analysts. Rents were up $20, or 1.2 percent, in the second quarter, and are up $23, or 1.4 percent, during the first half of 2023. Single-family rental rates increased $5 in June to $2,103, while year-over-year growth fell 80 basis points to 1.3 percent. “Demand has remained strong, driven by the job market, which added 1.5 million jobs during the first half of 2023, and weak home sales, which are presenting a challenge to first-time home buyers,” states the report. A growing number of metros are now posting negative growth year-over-year, states the report. Nine of the 30 metros tracked by Matrix were negative in June, mostly in the Sun Belt and West, where demand has reverted to normal as new supply comes online. This month’s report includes an updated list of metros that will be of interest to multifamily investors, owners and managers. Gain more insight in the new Yardi Matrix National Multifamily Report. Yardi Matrix offers the industry’s most comprehensive market intelligence tool for investment professionals, equity investors, lenders and property managers who underwrite and manage investments in commercial real estate. Yardi Matrix covers multifamily, student housing, industrial, office and self storage property types. Email [email protected], call (480) 663-1149 or visit yardimatrix.com to learn...

The U.S. multifamily sector faces complex challenges as the pandemic fades to a memory and a recession continues to loom for the U.S. economy later this year. Yardi Matrix vice president Jeff Adler dove deep into the market outlook and tough realities for operators during Thursday’s webinar. A full recording and presentation slides are available online. Current trendlines Matrix analysts have observed include: Multifamily fundamentals are generally strong, but continue to decelerate year-over-year A seasonal uptick in rents is ongoing and was reflected in reported data from March and April There is ongoing demand for renter-by-necessity communities, which have little new supply coming online Hybrid work has tilted household budgets towards housing expenses, rather than transportation A supply shortage in the U.S. housing market is likely to be ongoing for the next 5-10 years Inflation and interest rates continue to hamper transaction activity and will continue to do so for the near term The average U.S. asking rent rose $5 in April to $1,709, while year-over-year growth decelerated to 3.2 percent, down 80 basis points from March. (Gain more insights by downloading April’s Multifamily Report.) “Fundamentals have been pretty good, and we expected the deceleration (in rent growth). But there is a seasonal uptick happening – we did see that in April,” Adler said. “Affordability is still a key concern, and the political will to truly resolve the issue does not seem to be in evidence.” Consistent job growth and household formation over the last two years have continued to drive renter demand, despite lease renewal rates generally returning to pre-pandemic levels. In some cases, renters are seeking creative alternatives to hard-to-find housing, such as co-living situations, using short term rentals as permanent homes, or even subletting vacation rentals. But these aren’t long-term solutions, and ultimately new housing development will have to be the answer. “It’s important to note the historic increase in rents that occurred in 2021. There was a need for wages to catch up .. But when we look at the cost of housing to buy, it is still way more expensive compared to renting. Renting is still a viable and preferable economical alternative, including single family rentals and built-to-rent homes,” Adler said. In conjunction with a slowdown in construction financing due to banking sector instability, the upshot is that the supply shortage for multifamily housing will be exacerbated, potentially lasting up to a decade unless government bodies change their tune. If you’re looking for investment windows despite those challenges, be sure to review the webinar recording, which offers insight into target opportunity...

As the student housing sector continues to outperform other real estate classes during a time of economic uncertainty, tailwinds from the multifamily market and consolidation of the higher education landscape are driving strong performance. Those were two key takeaways from the latest Yardi Matrix market update, which took place this week and featured insights from Jeff Adler, vice president of Yardi Matrix, and Ron Brock, industry principal. If you missed the webinar, a session recording and the presentation deck is available now. Student housing demonstrated record preleasing as of March, with rent growth averaging 7 percent across all university types tracked by Matrix. Less expensive unit types, such as 3-bedrooms, are picking up a higher share of the preleasing inventory, indicating that more students than ever are returning to campus post-pandemic. “From an operations standpoint, preleasing season has crushed it this year,” Adler stated. “Fundamentals seem to be tied to increasing enrollment at the most competitive schools, which are the winners in the ongoing consolidation of the higher education system.” The Yardi Matrix student housing data set includes over 1.3 million beds at 2,500 universities and colleges nationwide, including the top 200 investment grade universities across all major collegiate conferences. Known as the “Yardi 200,” it includes all Power 5 conferences as well as Carnegie R1 and R2 universities. The top 50 largest universities are forecasted to have the most enrollment growth over the next five years, confirming consolidation of the higher education space. Adler began forecasting the anticipated consolidation in a Fall 2021 webinar and the trend continues to evolve, but is reflected in high demand for preleasing at colleges in urban areas and with multifamily shadow markets. In a notable demonstration of the trend, Southeastern Conference (SEC) schools logged the most annual rent growth of any Yardi 200 conference at 11 percent. “This is influenced by significant run ups in rents in the conventional multifamily sector – in and around the cities where the SEC schools are located,” noted Adler. “The tailwind coming from the multifamily sector has a significant effect on operating results.” That includes schools like the University of Arkansas, University of Mississippi and University of Tennessee, which were among the top performers for rent growth and preleasing growth over the last quarter. Other key takeaways from the presentation included: Deliveries of new student housing stock dipped in 2022 but are expected to rebound this year. Transaction activity has slowed due to higher interest rates. Investors backed off of purchases dramatically in Q1 2023, with only $148 million in sales completed, down substantially from the $1.5 billion recorded in the first quarter of 2022. Significant development and transaction activity may not take place until 2025/2026 after the economy improves and interest rates are lower. California is not the only state experiencing significant shortages in student housing. That’s also taking place in Florida (Florida Atlantic University, Florida A&M), at the University of Arkansas, the University of Tennessee and the University of Cincinnati. Florida is a hot spot for student housing development, with over 12,000 bedrooms under construction around four universities. Bottom line, the student housing sector is one of the hospitable places for investors these days, even with the economy in flux. “Student housing is in the best position compared to other real estate asset types because of continued high performance,” Adler said. “There are multiple paths for investment in student housing, there isn’t just one way to succeed.” Learn more about the student housing market conditions from the latest Yardi Matrix National Student Housing report, released...