A roundtable with CBRE's student housing experts
Recently, CBRE hosted a roundtable with its student housing experts for a State of the Market. Read on to learn what the experts had to say about this niche property segment.
Like all commercial property types, student housing has been affected by the COVID-19 pandemic. But surprisingly, the sector has held up better than expected, said Jeanette Rice, head of multifamily research for CBRE Research. She attributes student housing's resilience to three important market fundamentals:
1. Occupancies in the Spring
Most universities transitioned to online learning mid- to late-March. A survey of student housing management companies revealed physical occupancies onsite ranged between 40% to 60% in March and April, with some investors seeing an uptick in winter/spring term leasing due to residents being displaced from their on-campus housing.
2. Rent Collections
A CBRE survey found that rent collections for June (as of June 20) averaged 93.2% across 460,000 tracked beds. This was slightly higher than conventional multifamily rent collections, reported at 92.2% through June 20.
3. Pre-leasing for Fall Semester
After an initial slowdown, leasing momentum is gaining pace as most universities report they will open to on-campus classes. Based on the 600,000 beds CBRE surveyed in late June, leasing velocity is now only 2.3 percentage points behind last year.
University Plans for 2020-2021 Academic Year
Jaclyn Fitts, executive vice president of CBRE Capital Markets, Student Housing, pointed out that financial incentive for universities to operate in-person has been well-documented.
Eighty percent (80%) of universities have announced either in-person classes or the hybrid model with some on-campus instruction. The 77 universities that have indicated they will move online for fall 2020 represent only 21,411 of the 1,240,493 beds (1.7%) that Axiometrics Advisors tracks as purpose-built, off-campus student housing, and 61 of these universities are located in California.
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