2021 Student Housing Market Overview and 2022 Outlook - Flipbook - Page 34
TOP NEW SUPPLY: FALL 2021
universities are expected to see higher demand and could grow as much as 14 percent by 2029. Foreign enrollment reportedly grew
45 percent between 2008 and 2016; however, clamping down on H-1B visa applications and COVID-19 travel bans created an anomaly
decrease for 2020. With international travel restrictive policies easing in 2021 and vaccination rates continuing to rise, international
enrollment saw a substantial rebound, and will likely continue for Fall 2022. Many of the top universities anticipating new supply in
2022 have historical pent-up supply gaps and demand is higher than additional beds being delivered. This favorable environment at
many universities has prompted developers to take advantage of tight market conditions to achieve higher returns and counter rising
development costs. Per Axiometrics Data, only a few of 2022’s top 25 supplied universities received any 2021 purpose-built student
housing deliveries. The strategic distribution of supply across markets maintains the attractiveness of student product as more groups
are realizing the high-yield potential of untapped or underserved markets.
Newmark Student Housing expects new development to continue filling the void of older product, both on- and off-campus, located in close
proximity to universities. Furthermore, the median age of university-owned student housing is roughly 50 years, representing a unique
replacement opportunity for
capital investment. The market
continues to indicate a strong
preference towards purposebuilt student housing assets
STUDENT HOUSING SUPPLY TOTAL VS. GROWTH
Beds
TOP NEW SUPPLY: FALL 2021
University of Texas at Austin
100,000
90,000
800,000
80,000
than a half-mile from campus
700,000
70,000
since
600,000
60,000
500,000
50,000
400,000
40,000
300,000
30,000
200,000
20,000
Virginia Polytechnic Institute and State University
100,000
10,000
University of Washington
with the average distance of
new construction falling to less
2011.
The
preferred
pedestrian location does not
come without its own set of
challenges for new prospective
developments. The
scarcity
of developable land within
proximity to universities has
led to significantly increased
pricing,
construction
costs
rising steadily over the past
five
years,
construction
and
securing
financing
0
2011
2012
2013
has
been notably more difficult –
2014
2015
Total Supply
2016
2017
2018
2019
2020
deliveries
in
2021
2022
0
Supply Growth
evidenced by the reduction
in
2021
Source: Axiometrics/RealPage
and
forecasted reduction for 2022. These factors have thinned profit margins for developers and forced capital to clearly identify markets
and sites that can support current rental rate levels. Overall, cap rates in the near term are expected to remain low, and the abundance
of new equity entrants with a low cost of capital has allowed continued construction at lower development yields. It also appears
likely that investor demand will remain high for newly constructed, core assets pedestrian to top-tier universities – particularly if
the asset boasts high levels of pre-leasing velocity. However, given the finite availability of developable land sites and the increasing
price disparity between new construction rents and older product located farther from campus, demand for value-add investments is
expected to remain equally as strong as the upside opportunity in rent disparity more clearly becomes defined.
2,170
1,356
1,281
935
1,230
847
0
200
400
600
1,821
1,334
1,370
1,281
1,356
1,230
1,334
1,014
1,014
800 1,000 1,200 1,400 1,600 1,800 2,000 2,200
935
847
0
200
400
600
Source: Axiometrics/RealPage
800
1,000 1,200 1,400 1,600 1,800 2,000 2,200
Source: Axiometrics/RealPage
TOP EXPECTED NEW SUPPLY: FALL 2022
Beds
TOP EXPECTED NEW SUPPLY: FALL 2022
Beds
1920
1616
Indiana University
Virginia Polytechnic Institute and State University
University of North Carolina - Charlotte
University of Washington
Clemson University
Indiana University
University of Florida
University of North Carolina - Charlotte
University of Michigan
Clemson University
University of South Florida
University of Florida
University of Texas at Austin
University of Michigan
University of Maryland
University of South Florida
1570
1478
1396
1147
University of Texas at Austin 0
200
400
600
University of Maryland
400
600
1616
1570
1396
1086
1147
1039
1103
978
1086
800
1000 1200 1400
1039
978
200
800
1920
1478
1103
0
2 0 2 1 S T U D E N T H O U S I N G M A R K E T O V E R V I E W A N D 2 0 2 2 O UT L O O K
1,370
Texas State University
900,000
located pedestrian to campus,
1,821
University of Arizona
University of Texas at Austin
Arizona State University
University of Illinois - Urbana-Champaign
University of Arkansas
University of Arizona
Rochester Institute Of Technology
Arizona State University
University at Buffalo - State University of New York
University of Arkansas
Appalachian State University
Rochester Institute Of Technology
Pennsylvania State University
University at Buffalo - State University of New York
Texas State University
Appalachian State University
Pennsylvania State University
1,000,000
2,170
Beds University of Illinois - Urbana-Champaign
1600
1800
2000
Source: Axiometrics/RealPage
1000
1200
1400
1600
1800
2000
NEWMARK
35
Source: Axiometrics/RealPage