Multifamily Economic and Market Commentary

June 2023

Spring 2023 Off-Campus Student Housing Update

It has been over three years since the pandemic began and immediately impacted student housing performance for both

the spring and fall semesters of 2020. Since the spring 2021 semester, student housing fundamentals have continued to

see improving fundamentals. As of spring 2023, the trend continues as record-breaking performance for rent growth,

occupancies, and pre-lease growth rates continue to be above recent trends.

However, even though each semester has seen improvement since 2020, there is a general expectation that moderation

is on the horizon, and sooner rather than later. Moderating performance is expected simply because the projected

population size of potential college-age people is expected to continue declining through 2030. This expected

moderation will likely still see increased levels of rent growth, asking rents, and stable occupancies; however, as supply

remains below peak levels during the 2010s, fundamentals are expected to follow.

A New Normal For Annual Supply

The amount of new off-campus student housing being added to the existing inventory has been trending downward

since 2016, as seen in the chart above. For the second consecutive school year, new supply has been under 40,000 new

beds delivered. For the semester ending fall 2022, there were approximately 36,000 new beds delivered. Furthermore, as

of May 2023, both fall 2023 and fall 2024 are expected to have approximately 38,000 and 39,000 new beds delivered

according to RealPage Inc.

Indeed, the off-campus student housing sector had been oversupplied for quite some time. Between 2013 and 2016,

there were approximately 241,000 beds delivered, and since then the number of beds delivered annually has been

steadily decreasing. Many off-campus student housing developers realized that declining college and university

enrollments were resulting in a softening of demand and therefore began curtailing the number of new development

projects. Additionally, due to a combination of higher building material prices and ongoing construction labor shortages,

many developers have been narrowing their pipelines to focus on more timely projects that will deliver in the near term.

Furthermore, as interest rates have been elevated over the past several months, financing has become both more

stringent and more expensive than in previous years, keeping new supply in check. As a result, we believe that the new

baseline for student housing supply will be closer to the levels of fall 2022 and fall 2023’s expected supply, rather than

the amount of supply delivered between 2014 and 2018.

Source: RealPage Inc.

RealPage 175 Top Universities

Student Housing New Supply Deliveries by Beds 2014-2024*

0

10000

20000

30000

40000

50000

60000

70000

80000

*Indicates supply underway as of May 14, 2023
Multifamily Economic and Market Commentary

Improved Fundamental Performance

For the last two school years beginning in the fall semester, student housing performance has continued to improve. 

Although it is still early in the year, fundamentals for the upcoming fall 2023 school year appear to already be above 

the last two school years, as seen in the charts below. The pre-leasing period for the upcoming school year officially 

begins as soon as the current school year takes place. For example, for the fall 2023 school year, pre-leasing began in 

September 2022. According to Dallas-based student housing data vendor, RealPage, Inc., pre-leasing for the fall 2023 

school year as of April 2023 was approximately 73%. Comparing that to the prior year, we find that the pre-leasing rate 

for April 2022 was approximately 71%, which was the highest amount on record, at the time. 

Furthermore, pre-leasing rates are not the only student housing fundamental experiencing increased demand. As of 

April 2023, the occupancy rate for off-campus beds tracked by RealPage was at approximately 95% compared to 94% 

in April 2022. There appears to be ample demand for off-campus student housing properties; however, we believe 

that some of these elevated trends are beginning to stabilize and will start to slow down over the next few years, 

based on a myriad of factors, including population size, property transaction activity, and the rising costs of higher 

education, both in terms of tuition and financing costs. 

Source: RealPage Inc.

RealPage 175 Top Universities

Off-Campus Student Housing Occupancies Since Fall 2020

Off-Campus Pre-Leasing Rates Since Fall 2020

82%

84%

86%

88%

90%

92%

94%

96%

98%

Fall 2020 Fall 2021 Fall 2022 Fall 2023

0%

20%

40%

60%

80%

100%

120%

Fall 2020 Fall 2021 Fall 2022 Fall 2023

Source: RealPage Inc.

RealPage 175 Top Universities
Multifamily Economic and Market Commentary

Transaction Activity Halted – For Now?

According to MSCI Real Assets, student housing apartment transaction activity has drastically slowed down compared to 

activity in 2022 and 2021. As a result of the current elevated interest rate environment, financing student housing 

properties has become much more expensive. Furthermore, market players have decided to hold on to student housing 

properties due to the continued bid/ask spread gap, as well as those property owners that have below-average 

mortgage rates. For the period ending Q1 2023, there were approximately 36 student housing properties traded for a 

total $635 million. Compared to the same time last year, when 83 properties were traded for approximately $2.9 billion, 

this represents a decrease of nearly 78% year over year. The last time that student housing activity stalled in a similar 

manner was during the first two quarters in which the pandemic was declared (Q2 2020 and Q3 2020). During these 

respective quarters there were 9 and 15 properties traded for approximately $182 million and $262 million in total 

volume. We believe that investors will continue to hold on to their student housing properties over the next 12 to 18 

months at least, as they are likely not incentivized to sell with interest rates remaining elevated. 

0

5,000,000,000

10,000,000,000

15,000,000,000

20,000,000,000

25,000,000,000

30,000,000,000

Dollars ($B)

Rolling 4-Quarter Volume

Quarterly Volume

Sales Volume for Student Housing Properties Since 

Q1 2013

0

50

100

150

200

250

Student Housing Properties Traded Since Q1 2013

Source: MSCI Real Assets

Continued Stabilization Over the Short-Term, More Upside Longer-Term

The off-campus student housing sector has seen a resurgence in demand over the past two years, leading to elevated 

rent growth and occupancy levels, but that is not necessarily an indicator of future trends. New supply has continued to 

moderate, and fall 2023 is expected to see similar levels of new supply delivered. Gone are the days of 45,000-plus beds 

being delivered annually, as developers moved toward moderation. 

We believe that there are short-term headwinds that will persist for the student housing sector. Fundamentals have 

been at peak levels for the third year in a row, and it is widely expected that this year may be the sector’s apex. As supply

continues to moderate, we expect fundamental performance will follow, slowing to a trend that resembles pre-2020 

performance. The biggest headwind currently for student housing is the decreasing size of the college age population, 

coupled with higher tuition and student loan costs. However, we believe the longer-term outlook for the sector is 

brighter, as we expect interest rates to stabilize and the population cohort is expected to start increasing further out in 

the forecast. As a result, activity in the student housing transaction market could start picking up in the next year or two,

as investors decide to get back into the market in anticipation of possible rising enrollment rates. 
Multifamily Economic and Market Commentary

Francisco Nicco-Annan

Multifamily Economics and Strategic Research – Economics – Advisor 

Multifamily Economics and Strategic Research

June 2023

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