Student housing remains a resilient sector with promising long-term growth prospects, attracting significant capital despite ongoing challenges, according to the latest Yardi Matrix webinar held Thursday. Find the full recording here and find the presentation slides here. However, investors navigating the student housing market require a nuanced understanding of its unique dynamics and the ability to identify opportunities amid volatility. As of March, the average rent reached $895 per bedroom, marking an all-time high for the sector. A total of 41 universities tracked for the Yardi Matrix National Student Housing Report had double-digit rent growth. “Long term sector growth is good. This is going to continue to attract capital, particularly in light of what we expect to be ongoing struggles in many of the markets in multifamily. And you’ve got to really kind of pick the winners,” said Jeff Adler, vice president of Yardi Matrix. Student housing can offer savvy investors higher returns but comes with inherent volatility, characterized by fluctuating performance among different schools. Examples include colleges like Ole Miss and Mizzou, which showcase how poorly performing schools can experience a strong rebound, while previously successful institutions like the University of Nevada, Reno, may face challenges due to oversupply. “There’s inherent lumpiness, or volatility, in the financial performance because supply tends to come in not evenly, but in large chunks and needs to get absorbed,” said Adler. “As you think about performance at a school, you need to see through those cycles, and/or you can actually use those points as opportunities to buy or sell if you know where the timing is going to hit.” Success in student housing hinges on a diversified portfolio across markets and strategies, not solely reliant on enrollment or rent growth metrics. Data-driven insights from Yardi Matrix help set realistic expectations and navigate short-term volatility while focusing on long-term fundamentals. The student housing sector is relatively young, with ample opportunities for development, rehabilitation, and value-added strategies. “One of the things I have taken away is just how young this industry is. (Around) 80 percent of the inventory is less than 25 years old, which means that there are still opportunities to develop a rehabbed value-added sector and an acquisition strategy,” Adler said. “The primary strategy in the sector has been new development, and that makes a lot of sense, but there are other strategies emerging as this industry begins to age.” Such strategies involve developing or acquiring properties near flagship state schools, emphasizing demographic trends and acceptance rates. Value-add strategies target slower-growth schools with potential for improvements or strong barriers to new supply. Opportunistic approaches involve timing markets based on supply and demand waves, with considerations for market characteristics and regulatory risks. With careful planning and informed decision-making, investors can unlock the full potential of this dynamic and resilient sector. View the full event recording with many more student housing investment insights, and get even more data from the latest Yardi® Matrix National Student Housing...
Self Storage
Faces Headwinds
The self storage real estate sector is facing headwinds and continues to be affected by current market conditions, according to the latest Self Storage National Report from Yardi Matrix. Annual street rate growth was still negative in February. The average annualized same-store asking rent per square foot for combined mix of unit sizes reached an average of $16.37 nationally last month, marking a 3.6 percent decrease on a year-over-year basis. All top metros registered a negative street rate on an annual basis in February. Combined same-store rates for non-climate-controlled units and climate-controlled units decreased in all the top metros tracked by Yardi Matrix on a year-over-year basis. “There is hope that a turnaround in the housing market later this year or early 2025, contingent on interest rates cuts, could unlock pent-up demand for housing and migration, thus fueling demand for self storage,” say Matrix analysts. Investors are showing precaution due to market uncertainty. Nevertheless, despite the impact of high interest rates, there is still interest in self storage development. Yardi Matrix tracks a total of 5,148 self storage properties in various stages of development, including 880 under construction, 2,031 planned, 592 prospective, 1,546 abandoned and 99 deferred properties. Yardi Matrix also maintains profiles for 30,294 operational facilities, bringing the total dataset to 35,442. Gain more insight on the performance of the self storage sector. 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...
Student Housing
Pre-leasing gains more ground
Last month, the average student housing preleasing rate for Yardi 200 schools reached 61.5 percent, marking a 450-basis-point increase year-over-year, according to the latest Yardi Matrix National Student Housing Report. The market is healthy enough to absorb 46,000 new beds coming online, with demand fueled by enrollment growth. The average rent per bed reached $883 in February, showing a 5.2 percent increase since the same period last year. Year-over-year rent growth was down from the 6.7 percent recorded in October 2023. A total of 16 universities were more than 80 percent preleased, including larger student markets like Ole Miss (98.7 percent), Purdue (88.7 percent), Tennessee-Knoxville (87.5 percent), Virginia Tech (87.2 percent) and Arkansas (86.8 percent). Only 35 schools were less than 40 percent preleased, compared to 47 percent in February 2023. “Rent growth slowed each month of the leasing season but is well-above the average of 3.5 percent going back to the beginning of 2018, and well ahead of the general multifamily market, as student housing has proven to have much different demand drivers,” note Matrix analysts. Enrollment data collected from 178 universities shows that total enrollment was up 0.8 percent on a year-over-year basis, marking a significant increase from the -0.3 percent recorded in Fall 2022. Yardi Matrix forecasts that 46,285 new beds will come online in 2024, improving considerably on the 35,610 beds delivered in 2023. Gain more insight in the new Yardi Matrix National Student Housing 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, vacant land, industrial, office, retail and self storage property types. Email [email protected], call 480-663-1149 or visit yardimatrix.com to learn...
Multifamily Debt
Maturing Loans Test Sector
The multifamily market has 58,533 properties with loans set to mature over the next five years, representing $525 billion of the total $1.1 trillion of loans currently backed by apartments, according to a new special report from Yardi Matrix. Metros with the largest volume of maturities include Atlanta ($34.9 billion), Dallas ($26.6 billion), Denver ($22.9 billion), Houston ($20.8 billion), New York ($19.9 billion) and Chicago ($18.8 billion). Markets with the highest percentage of loans coming due through the end of 2029 are Atlanta (65.9 percent), Denver (56.9 percent), Nashville (56.2 percent), Las Vegas (55.9 percent), Houston (53.6 percent) and Chicago (53.2 percent). More than half of the multifamily loans found in Yardi Matrix’s database, $641.8 billion (56.3 percent) was originated by Fannie Mae and Freddie Mac. Next in line, at $187.3 billion (16.4 percent) came from commercial banks, followed by the federal government/HUD ($115.7 billion, 10.1 percent), debt funds (69.9 billion, 6.2 percent), life companies ($67.6 billion, 5.9 percent) and CMBS ($25.2 billion, 2.2 percent). “Multifamily originations peaked during years with record transaction volume, including 2021 (when $194.7 billion of loans were originated) and 2022 ($209.8 billion), as investor demand reached a high point during a time of strong fundamental performance and low interest rate,” note Matrix analysts. Of the loans in the database, $61.8 billion are set to mature in 2024, with another $84.3 billion in 2025, $89.3 billion in 2026, $77.9 billion in 2027 and $107.3 billion in 2028. By percentage, 5.4 percent of the loans will mature by the end of this year, 12.8 percent by the end of 2025, 27.5 percent by the end of 2027 and 46.1 percent by the end of 2029. Markets with a high percentage of loans maturing over the short term and recent negative rent growth include...
Rents Vary Regionally...
Reports Yardi Matrix
National asking rents posted their first increase in over seven months in February, according to the latest Yardi Matrix National Multifamily Report. The average U.S. asking rent rose $1 to $1,713 in February, up 0.6 percent year-over-year (YoY), while occupancy decreased 60 basis points YoY to 94.5 percent as of January. Markets in the Northeast and Midwest continued to register rent increases, in contrast to rent contractions in high-supply Sun Belt markets. Of Yardi Matrix’s top 30 metros, 13 posted rent declines, and five were down by three percent or more YoY. Occupancy was positive only in San Francisco, up 0.1 percent. While rents generally show signs of stability, factors including supply, demand, regional metrics and affordability will determine the market’s 2024 performance. Occupancy is likely to continue to decline, with one million new rental units expected to come online through the end of 2025. Already, heavy deliveries in Sun Belt and Southwest metros have eroded rent growth, with more construction underway. “While high-demand markets are likely to record weak rent growth over the next year or two, the seeds of a rebound have been planted, as starts are declining and deliveries will drop in 2026 and 2027,” states the report. Single-family rents declined $2 in February to $2,133, equating to a 1.2 percent year-over-year increase. Single family occupancy remained flat at 96.5 percent in January. High mortgage rates and the scarcity of for-sale assets continue to boost demand. 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, vacant land, industrial, office, retail and self storage property types. Email [email protected], call...
Self Storage May Struggle
As Fewer Americans Move
The latest Yardi Matrix Self Storage webinar provided insights into the current state of the economy and its impact on the self-storage industry. Find a full recording of the March 6 webinar here and view the presentation deck here. The self storage sector began seeing weaker performance in 2023 due to a decline in demand, primarily caused by low home sales (due to high interest rates) and subsequent reduced mobility nationwide. There has been a 25 percent reduction in state-to-state migration compared to 2021 and 2022. Consequentially, self storage revenue growth was nearly flat last year, driven by declining occupancy and decelerating street rent growth. Find the most recent monthly report on the self storage sector from Yardi Matrix. A near term expansion in self storage supply is forecast, while the coming years are expected to show an overall inventory decrease. Jeff Adler, vice president of Yardi Matrix, mentioned new rental strategies employed by REITS that keep street rents low and quickly moving vacant spaces, impacting same-store rent growth negatively. Despite construction and completions remaining steady, same-store rent growth was -3 percent in January. Adler discussed the current state of the market, highlighting that occupancy and rent increases during the pandemic pushed same-store sales revenues up by 37 percent. However, same-store occupancies have now declined to pre-COVID levels, hovering around 90 percent, and the decline in street rents is affecting overall revenues. Matrix analysts believe that that the sector may not see a significant performance improvement until home sales recover, expected in late 2024 or early 2025. “I think an improvement really doesn’t happen until home sales happen, which means the for-sale market opens up and that means (lower) interest rates, and that’s later in 2024, maybe early 25,” Adler said. However, potential opportunities in self storage are not unheard of. Locations where supply pressures were putting downward pressure on street rents, such as Orlando, Tampa, and Atlanta. Markets that experienced declining supply over the past few years, like New York, Denver, and Minneapolis, are considered to be on the mend. “These are places that really were hit hard a few years ago. But supply is waning. So they’re the first to kind of bounce, and I would say there are opportunities for stressed or distressed properties, you know, acquired in 2021 and 22 or developed in 2023,” Adler said. Gain more insight on the state of the economy as a whole and projections for the housing market by listening to the webinar...
Rent Forecast Update
From Yardi Matrix
Multifamily asking rents broke the five-month streak of sequential average declines in January, rising 0.07 percent, shows a new special report from Yardi Matrix. Of the 142 markets tracked, last month 61 posted declines, 71 marked increases and 10 remained flat. Largest increases continued to occur in midsize cities in the Northeast and South, including in White Plains, NY; Buffalo, NY; Birmingham, AL; Worcester-Springfield, MA; and Columbus, GA. The largest decreases were consistent in Western markets and Florida. On a national level, by asset class, rents in the Renter-by-Necessity (RBN) segment rose 0.08 percent, outperforming Lifestyle (0.04 percent). The strongest performers in RBN rents, with MoM growth of over 1 percent, were 11 midsize cities in the South and Northeast and four markets in the West. In the Lifestyle segment, 14 markets posted MoM growth greater than 1 percent, 10 of which were in the South or Midwest and four scattered far from Northeast—Honolulu, the Inland Empire, Miami and the Central Coast. “Overall performance in asking rents in January was remarkably strong for a month that is generally very weak and often negative, and we expect the trend of RBN rents performing better than Lifestyle rents to continue throughout the year,” say analysts. The strong job reports and improving consumer confidence have pushed the expected mild recession to the end of this year or beginning of the next year. This has also impacted Yardi Matrix’s national forecast for 2024, up from 0.8 percent to 1.8 percent, but the substantial influx of supply expected to come online this year will dampen rent growth in many of the larger Sun Belt markets. Read the latest Multifamily Rent Forecast Update from Yardi Matrix. Yardi Matrix offers the industry’s most comprehensive market intelligence tool for investment professionals, equity investors, lenders and...
Rents Remain Flat
Yardi Matrix Update
The multifamily market was stable at the start of 2024, despite the pressure of a supply boom in some markets, according to the latest Yardi Matrix National Multifamily Report. The average U.S. asking rent remained flat at $1,710 in January for a 0.5 percent year-over-year increase, while occupancy decreased 50 basis points year-over-year in December, to 94.6 percent. Rent growth remained highest in the Northeast and Midwest, while four of Yardi Matrix’s top 30 metros posted rent declines of three percent or more year-over-year. Occupancy was positive in one market and remained flat in two. Rent growth will be impacted by supply in 2024, as Yardi Matrix forecasts a record 540,000 units to be delivered this year, and another 460,000 units in 2025. “Another year of weak growth is expected in 2024 largely due to the rapid increase in deliveries that stems from the sector’s strong performance, high liquidity, and favorable treatment in the 2017 tax bill,” say Matrix analysts. New supply is inconsistent across the map, with the highest amounts in fast-growing tertiary and secondary markets, predominantly in the Sunbelt and Western regions. There, rent growth will likely remain tepid. Meanwhile, the weak supply in markets in the Northeast and Midwest is expected to keep rents rising. Single-family rentals outperformed multifamily last month, with the average rent up $2 to $2,130 in January, a 1.5 percent year-over-year increase. The occupancy rate in December stood at 95.7 percent, up 10 basis points year-over-year, a sign that demand remained robust. 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, vacant...
Rent Forecast
From Yardi Matrix
A large amount of multifamily housing supply coming online is expected to suppress national average asking rent growth this year, according to a new special report from Yardi Matrix. While national average asking rents grew by 1.6 percent in 2023, the new supply will serve to depress rent appreciation this year “in many of the markets that saw explosive growth during the pandemic.” Some markets could end the year with slight negative growth. Stronger growth is anticipated in the working-class Renter-by-Necessity segment, as most of the new supply comprises upscale Lifestyle units, the report adds. Pandemic rent growth boomtowns including Las Vegas; Boise, Idaho; Phoenix; and Austin, Texas, saw the largest rent declines in 2023. Medium-size cities with large universities such as Madison, Wis., Knoxville, Tenn., and Syracuse, N.Y., were among the top performers. Another key story in 2024 is the continued compression in the spread between in-place rents and asking rents. Most markets still have a large gap between the two, but it will “continue to shrink as asking rent increases remain muted in the near term,” according to the report, which also predicts that the national economy will “slow significantly for two or three quarters.” The large volume of supply slated to come online in 2024 will take time to be completely absorbed. Afterwards, rent growth will return to the typical 3 to 4 percent annual increase in asking rents. Read Matrix’s analysis in the new Multifamily Rent Forecast Update. 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...
Storage Stabilizes
Latest Matrix Report
– The self storage market is achieving stability after an 18-month slowdown, the latest Self Storage National Report from Yardi Matrix shows. Annual street rate growth was still negative as of December. The average annualized same-store asking rent per square foot for the combined mix of unit sizes and types reached an average of $16.57 nationally last month, a 2.7 percent decrease on a year-over-year basis. Nearly all top metros had a negative street rate on an annual basis in December. Combined same-store rates for non-climate-controlled and climate-controlled units decreased in all but one of the top metros tracked by Yardi Matrix on a year-over-year basis. “New supply is a concern in certain markets but overall new supply in the top markets is expected to drop in 2024 as construction lending has dried up in the face of declining street rates, slower lease up pace and higher interest rates,” say Matrix analysts. Self storage is dependent on the housing market for demand and slowing home sales activity and fewer moves have had a significant impact. If the national housing market improves, the outlook for storage will quickly look up. Across the U.S., Yardi Matrix tracks a total of 5,073 self storage properties in various stages of development, including 871 under construction, 1,980 planned, 621 prospective, 1,510 abandoned and 91 deferred properties. Yardi Matrix also maintains operational profiles for 29,745 completed self storage facilities, bringing the total data set to 34,818. Gain more insight on the performance of the self storage sector. 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...
Student Housing Stands Out
Yardi Matrix Update
The student housing market jumped into the 2024-2025 leasing season on a high note, with December preleasing well ahead of last year’s figure, according to the latest Yardi Matrix National Student Housing Report. Asking rates also continued to climb, hitting $858 per bed in December and marking a 4.9 percent increase on a year-over-year basis. The sector was off to a record start, as preleasing for the 2024-2025 school year reached 47.3 percent in December, a nine percent increase over December 2022. The exceptional preleasing indicates a high renewal rate, with 51 markets boasting a 50 percent rate in December and ten schools already at least 75 percent preleased. Rent growth slowed a bit, falling from 6.4 percent recorded earlier in the leasing cycle to 4.9 percent in December 2023. “Many of the markets with the fastest preleasing are seeing the strongest rent growth as operators take advantage of the surge in demand. Twenty-seven schools with over 10 percent rent growth in December are, on average, five percent ahead of preleasing last year,” the report states. Based on data gathered from more than 150 schools, Yard Matrix shows a rebound in enrollment in the current academic year. Enrollment at these schools is up 1.4 percent from last year—almost triple the growth recorded in fall 2022. Student housing investment is in line with current trends across the real estate industry, as high interest rates continue to impact sales. Preliminary data shows that only 73 student housing properties changed hands in 2023 across Yardi 200, compared to an average of 205 properties sold in 2021 and 2022. Gain more insight in the new Yardi Matrix National Student Housing 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, vacant land, industrial, office, retail and self storage property types. Email [email protected], call 480-663-1149 or visit yardimatrix.com to learn...
Multifamily Outlook
From Yardi Matrix
After two years of stellar growth, rents decelerated in 2023, despite demand still at strong levels thanks to a resilient economy. The 2024 Multifamily Outlook from Yardi Matrix anticipates a year of challenges, including slowing national rent growth. National rent growth moderated to 0.4 percent year-over-year through November 2023, from a combined 23.5 percent in 2021 and 2022. Absorption stabilized at 300,000 apartment units in 2023, compared to 600,000 in 2021 and 200,000 in 2022. Yardi Matrix expects that rent growth and occupancy will be heavily tested next year. Of the 1.2 million apartment units under construction at the start of 2024, 510,000 are expected to be delivered by the end of the year, the highest number in decades. “We expect demand for multifamily to remain healthy in 2024, but headwinds that include slower job growth, increasing supply and waning affordability in some markets will keep rent growth restrained again,” state analysts, forecasting a tepid 1.5 percent rent growth nationally. The 2024 forecast calls for Midwest metros to lead rent growth, and the Sunbelt and West markets to continue to experience in-migration from the coasts both by residents and businesses. Sunbelt markets such as Austin, Nashville, Charlotte and Orlando are already seeing stalling rent growth, and despite robust population and job growth, they boast high levels of new supply, which will further suppress rents. On the investment front, already down by 70 percent year-over-year, multifamily sales will likely remain sluggish in 2024, due to the impact of interest rates and pricing uncertainty. Gain more insights in the latest U.S. Multifamily Outlook from Yardi Matrix. 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...
Self Storage Update
From Yardi Matrix
The self storage industry is feeling the impact of the housing market slowdown on demand for storage units, states the latest Self Storage National Report from Yardi Matrix. The average annualized same-store asking rate per square foot for combined unit sizes and types averaged $16.57 nationally in November, a 4.2 percent drop on a year-over-year basis. Street rates also remained negative on an annual basis in November in nearly all top metros. Combined same-store rates for non-climate-controlled units decreased in all but one of the top markets tracked by Yardi Matrix on a year-over-year basis. Meanwhile, the asking rates for same-store climate-controlled units fell in all major metros. “Rising housing costs and incomes that have not kept pace has resulted in one of the most unaffordable housing markets in the past thirty years, stifling home sales. As a key storage demand driver, a slowdown in the housing market is dampening occupancy and weighing down street rates,” say Matrix analysts. At a national level, Yardi Matrix tracks a total of 5,028 self storage properties in various stages of development, including 883 under construction, 1,940 planned, 631 prospective, 1,489 abandoned and 85 deferred properties. Yardi Matrix also maintains operational profiles for 29,376 completed self storage facilities, bringing the total data set to 34,404. Gain more insight on the performance of the self storage sector. 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...
Rents Trend Down
Reports Yardi Matrix
National multifamily asking rent decreased for the third consecutive month in November, according to the latest Yardi Matrix National Multifamily Report. The average U.S. asking rent fell $6 to $1,713 in November, with year-over-year growth at 0.4 percent, on par with September. Occupancy remained steady at 94.9 percent since August. Metros in the Northeast and Midwest remained in the lead for rent growth, while Sunbelt and West metros lagged. More so, seven of Yardi Matrix’s top 30 markets were down 3.0 percent or more year-over-year, with the most significant rent declines registered in Sunbelt metros where developers delivered new supply in volume. “One could say the multifamily market is metaphorically hunkering down for the winter as property owners face the prospect of weak near-term rent growth due to inflation, the loosening job market and a surge in deliveries in some markets, while values and capital markets liquidity deteriorate as interest rates remain higher-for-longer,” states the report. Although rent growth was restrained in the middle of the last quarter of 2023, it posted a 23.5 percent increase since the start of the pandemic in March 2020. The current slowdown resulted from stock expansion in some areas and stretched affordability in other areas. Planned deliveries over the next two years will likely create some balance. Rents contracted across asset classes, steeper in the Lifestyle segment (down 0.4 percent) than in the Renter-by-Necessity segment (down 0.2 percent). Overall, monthly rent growth was negative in 25 of Yardi Matrix’s top 30 metros. Single-family rents fell $8 in November to $2,115, for a 0.7 percent year-over-year increase, down 30 basis points from October. Rent growth was solely sustained by the RBN segment, up 3.2 percent year-over-year, while Lifestyle rents declined 0.1 percent during the interval. Gain more insight in the...
Student Housing
Off and Leasing for Next Year
The fall semester may just be coming to a close, but preleasing for the 2024-2025 school year is already underway and off to a strong start, states the latest Yardi Matrix student housing report. Advance leasing for next school year started off extremely strong, reaching 25.2 percent for the Yardi 200 in October, well ahead of the previous record 10.4 percent preleased in October 2022. Preleasing this year is indicative of solid renewal activity early on and high demand for housing at many major universities, with 14 schools already more than 40 percent preleased. As for this year, final occupancy for the Yardi 200 markets for the fall 2023 semester settled at 94.6 percent in September 2023, compared to 96.2 percent in September 2022. Lower occupancy this year can be partly attributed to new properties that delivered late or struggled with preleasing. Properties that were completed in 2023 only reached 81.7 percent occupancy for the fall 2023 semester. Last month, average asking rent per bed was $854 among the Yardi 200 markets for the 2024- 2025 school year, slightly higher than where it ended the 2023 preleasing season in September 2023 and 6.6 percent higher than October 2022. “Some of the schools with the fastest preleasing are already seeing rents up 15-25 percent year-over-year, as operators take advantage of the surge in demand,” states the report. Read more findings from the latest student housing 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, vacant land, industrial, office, retail and self storage property types. Email [email protected], call 480-663-1149 or visit yardimatrix.com to learn...
Demand Still Sluggish...
For Self Storage
Slowed demand for self storage continues to drive street rates lower, reports the new Self Storage National Report from Yardi Matrix. Annual street rate growth stayed negative in October. The average annualized same-store asking rate per square foot for the main unit types and sizes averaged $16.77 nationally last month, marking a 4.2 percent drop from the average recorded in October 2022. Street rates also remained negative on an annual basis in October in nearly all of the top metros. Combined same-store rates for non-climate-controlled units fell in all but one of the markets tracked by Matrix year over year, while asking rates for same-store climate-controlled units decreased in all of the top metros. “Elevated residential mortgage rates have slowed home sales, reducing population mobility, a major driver of storage demand. As a result, storage operators continue to lower asking rates to drive new rental demand,” states the report. In-place storage rents continue to trend upwards, supported by existing customer demand, helping bolster rental income for operators. In addition, the labor market remains relatively strong and inflation is slowing, which will benefit the sector as it helps boost the financial confidence of new and existing customers. Nationally, Yardi Matrix tracks a total of 5,006 self storage properties in various stages of development, including 864 under construction, 1,940 planned, 673 prospective, 1,457 abandoned and 72 deferred properties. Yardi Matrix also maintains operational profiles for 29,234 completed self storage facilities in the U.S., bringing the total data set to 34,240. Gain more insight on self storage performance. 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...
Supply Forecast
From Yardi Matrix
Multifamily construction starts increased slightly in Q3 2023, and should have a positive impact on future deliveries, states the latest Multifamily Supply Forecast from Yardi Matrix. Construction starts remained relatively robust in the first half of 2023, and the under-construction pipeline increased 7.6 percent in the third quarter. As a result, the Q4 2023 supply forecast update has increased forecast completions 5.8 percent for 2024 and 6.2 percent for 2025. For multifamily markets tracked by Yardi Matrix, there are currently 1,223,601 units in the under-construction pipeline. Of these units, 479,634 are currently in lease-up, roughly in line with the trailing six-month average of 483,000 units but some 15.9 percent above year-ago levels. Most of these units will be completed this year or in the first half of 2024. Multifamily construction starts held at a relatively high level through the first half of 2023. As a result, the number of under-construction units not in lease-up continues to increase. Currently there are 743,967 units, a 16.2 percent quarterly increase and a 35.3 percent increase over year-ago levels. These units will most likely be completed in 2024 or 2025. Find more insights on forthcoming multifamily supply from Yardi Matrix. 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...
Student Housing Webinar
Matrix outlook remains positive
The Yardi Matrix team, including Jeff Adler and Tyson Huebner, delivered its final webinar of the 2023 year on the student housing sector’s performance and investment opportunities. If you missed it, you can view the recording and presentation slides here. Student housing maintained strong performance into the start of the 2023/2024 school year, though preleasing activity and rent growth showed some signs of slowing in the final weeks of leasing season. “The bottom line is that this sector compared to other sectors in the housing industry is looking very stellar. Good positioning, good rent growth – we don’t think (next year) will be quite as good as this year was, but still very strong,” said Adler, vice president of Yardi Matrix. “This is a great real estate segment and industry to be in, but picking the right schools is very critical to success.” Yardi Matrix has updated the schools whose housing is tracked in the Yardi 200, swapping out about 30 institutions less relevant to investors. The total tracked data set now includes 2,200 properties with 1.1 million beds. As of September 2023, 95.1 percent of beds at Yardi 200 universities were preleased, compared to 96.2 percent in September 2022. Lower preleasing in recent months can be partly attributed to slow lease-up of new 2023 deliveries, which were only 84.4 percent preleased in September. Rents are near an all-time high at $846 per bed, relatively unchanged in the past four months. Rent growth dropped to 6.1 percent in September, down from 6.5 percent in August and a peak of 7 percent in March 2023. But it is still well above previous years; it averaged 2.9 percent in September 2019, 2020, 2021 and 2022. (Read more findings from the latest student housing report here.) Student housing has seen a steep drop-off in transaction activity, which is attributed to ongoing strong performance and difficult financing conditions. But for owners and developers who completed new projects in time for fall leasing, rents were much higher than for existing properties. “New properties delivering this year had rents that were 29 percent above the national average,” said Huebner. Rents per bed for newly completed units averaged $1,088 as of September. “With continued rent growth in the sector and new supply coming at pretty high price points, I do think that will be an emerging investment opportunity when capital market conditions are ripe,” Adler said. He continued: “Everything’s a great place to put capital into; it’s a great place to participate. It does require an intense knowledge of each particular school and the sort of demand supply enrollment balances that make that all work.” Improve your market knowledge with a Yardi Matrix subscription: 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...
Matrix Assesses Multifamily Market
Webinar insights include economy, WFH, affordability and more
Yardi Matrix vice president Jeff Adler delivered an in-depth update on the state of the U.S. economy and the multifamily investment landscape last week, covering everything from inflation to recession risk to post-pandemic in-office trends. You can review the recording of the webinar and presentation materials here. Industry insiders know that these webinars are among the very best way to stay up to date on trends, performance and data. The next Matrix webinar will cover the outlook for the student housing sector on Oct. 25. You can sign up here. Among the key Yardi Matrix house view takeaways on the economy: U.S. economic growth is still strong, at 2.4 percent GDP growth in Q2 and strong early numbers for Q3 Inflationary pressures have started to cool, but remain elevated due to underlying price pressures Labor market is tight, but showing signs of softening “Inflationary pressures have been cooling, they remain a bit elevated, they are coming down. Maybe not as quickly as the Fed would hope,” Adler said. He still anticipates that a mild recession is on the way, likely landing in Q4 or the first half of 2024. “It’s a little hard for me to pinpoint exactly, but the process is pretty much played out, if not the exact timing of it.” Top line takeaways for those interested specifically in the multifamily sector: The market continues to outperform expectations, despite decelerating rent growth Regional market rotation is underway. Examples include slowing performance of Lifestyle units in the Sunbelt, due to increased supply, and outperformance in Midwest, Northeast and some Mountain metros This market rotation is due to affordability, which has become a primary focus for renters and pundits alike Supply shortage of U.S. housing is likely to be in place for the next decade “Rent growth has slowed down. We’re now looking at a tenth of a point in August over July,” Adler stated. Sequential rent growth is also very weak. While beneficial for multifamily operators, one of the sector’s greatest challenges is housing supply and affordability, which go hand in hand. “The housing deficit that built up from the Great Recession is still there. Regulatory costs account for 40 percent of multifamily development costs,” Adler noted. Some states, like California, Texas and Florida, but still have a long way to go. “If you really want to solve the problem, you got to have supply of all kinds. Where we have seen rents come down or decelerate, it’s been in markets with lots of supply,” he stated. One of the most interesting points shared in the webinar was how in-office work trends have played out over the last year. Data was delivered by Scoop. These metrics are relevant to the housing market because they determine how much flexibility workers have with where they live. Key takeaways included: The majority of U.S. companies, 61 percent, are allowing workers some in-office/remote flexibility The average in-office requirement time per week is currently 2.6 days Massachusetts, Oregon and Washington are the states with the most flexibility for remote work. The least flexible are Alabama, Kentucky and Arkansas Bottom line, rise in remote work has allowed workers to leave cities for more suburban areas, leading to declining population in some metros Want to gain all the great insight from Wednesday’s webinar? Find the recording of the webinar and presentation materials here and get...
Student Housing in Strong Spot
To start the 23/24 School Year
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 Rent Update
From Yardi Matrix
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...
Weak Demand Hurts Self Storage
Yardi Matrix webinar recap
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...
Single-Family Rental Market
In Growth Mode
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...
Street Rates Fall
Self Storage Update
Self storage street rates slipped month-over-month in July as demand and supply trends soften, according to the latest National Self Storage Report from Yardi Matrix. Street rate performance was weaker than normal in July. Nationally, overall 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. “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. Demand is impacted by the weak home sales market and domestic migration coming down from pandemic highs,” state Matrix analysts. Street rates continued to be negative year-over-year in July in nearly all of Yardi Matrix’s top 31 metros. Rates for 10×10 non-climate-controlled units dropped in 30 of the top 31 metros compared to July 2022, while rates for similar-size climate-controlled units also decreased in all but one of the top markets (Pittsburgh). Despite the challenges, there are bright spots. The job market remains sound, and strong consumer balance sheets will support long-term demand. 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. Learn more about the state of the self storage sector nationwide. Yardi Matrix tracks a total of 4,916 self storage properties in various stages of development, including 830 under construction, 1,977 planned, 672 prospective, 1,375 abandoned and 62 deferred. Matrix also maintains operational profiles for 30,152 completed self storage facilities across the United States, bringing the total data set to 35,068. Yardi Matrix offers the industry’s most comprehensive market intelligence tool for...
Student Housing Updates now Monthly
Near-Record Preleasing in July
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...
