Student Housing Properties Are Beginning to See Fallout from Overdevelopment

There was a wide discrepancy in the performance of student housing properties in the fall of 2019.

The performance of student housing properties in the lease-up for the fall 2019 semester varied more widely than usual, according to industry sources, including Carl Whitaker, who manages the market analytics team for RealPage Inc., a provider of property management software and services. Some student housing assets performed very well, while others struggled.

Developers continue to open tens of thousands of new student housing beds every year. But it is getting increasingly difficult for them to get the numbers just right—especially since so many of the new student housing properties are so expensive that only a fraction of students can afford them.

“Much of the new supply in recent years has been at a significant rent premium to existing properties,” says William Talbot, executive vice president and chief investment officer at American Campus Communities, a student housing REIT. “The new developments have generally leased up well in their inaugural year, despite the higher rents, but frequently struggle to maintain those rents.”

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