Rents at student housing properties increased during a difficult two-year period for conventional apartments, according to a new research report by the National Multi Housing Council, a Washington, D.C.-based industry trade group.
The report, which examines rent growth in 64 college towns during 2004-2006, finds that at a time when conventional apartment properties were struggling with concessions and lower effective rents, many properties targeting students were posting rent gains.
The median rent growth rate between 2004 and 2006 across median rates for all unit types studied (e.g., studio; one-bedroom, one-bath; three-bedroom, two-bath) was 7 percent. This exceeded the 6.5 percent growth rate in rents measured by the Consumer Price Index during the same period.
Other findings in the report included:
- Units with three or more bedrooms tended to have the highest median growth rates from year to year, ranging from 9 percent to 13 percent.
- The areas with the highest rent growth include the University of Wisconsin (Madison), the University of California-Irvine, and Georgia Southern University.
- Negative rent growth was recorded for several unit types in different areas of the country. Clemson University (Clemson, S.C.), for example, posted negative rent growth in four of the unit types examined. Virginia Tech came in second with negative rent growth in three unit types.
- California schools dominate the list of high-rent markets. Stanford University and San Jose State University posted the highest rents for six of the eight unit types for which data was available. A third California school — the University of California-Irvine — is on the high-rent list for five unit types. Two non-California schools also rank among the highest rents for five unit types — Cornell University (Ithaca, N.Y.) and Rutgers University (New Brunswick, N.J.).
- Despite the conventional wisdom that student housing providers must offer nine-month leases, just a small number of properties offered only nine-month leases. One-third of the properties offered both nine- and 12-month leases. The remaining properties offered traditional 12-month leases.
- Student housing leases remain largely “by the unit” and not “by the bed.” Fully 1,300 of the 1,508 properties surveyed rented by the unit. Only 140 rented by the bed. A small number offered both types of leases. By-the-bed properties seem to be more common in the Southern states.
The 76-page study is the fourth in a series of reports published by NMHC. More information is available at NMHC’s Web site.