flexiblefullpage -
billboard - default
interstitial1 - interstitial
catfish1 - bottom
Currently Reading

Student housing market expected to improve in 2024

Student Housing

Student housing market expected to improve in 2024

Fred Pierce, President and CEO of Pierce Education Properties, discusses debt in the student housing market, leasing, and gives a 2024 market outlook.


By Quinn Purcell, Managing Editor | February 13, 2024
AI student housing dorm room
AI image courtesy Vusal, Adobe Stock

The past year has brought tough times for student housing investment sales due to unfavorable debt markets. However, 2024 offers a brighter outlook if debt conditions improve as predicted.

Fred Pierce, President and CEO of Pierce Education Properties, a privately held owner and operator of student housing, provided his commentary on the financial marketplace and state of student housing in a recent Q&A.

Student Housing Market Highlights:

Investment sales

Though low in 2023 due to unfavorable debt markets, investment sales are expected to rebound in 2024 with improving debt conditions.

“The investment sales market in student housing this year, much like all of commercial real estate, has not been very voluminous,” says Pierce. “In fact, some are expecting perhaps 20% of the volume that has been realized in recent years.”

A positive area for loan assumptions is in the places that didn’t look promising in previous years, but have now become attractive in the current market. According to Pierce, 80% of the deals that Pierce Education Properties are underwriting in 2024 will involve a loan assumption.

Debt markets

Debt markets were challenging in 2023 with high interest rates, but potential rate reductions  offer a positive outlook for 2024.

“The debt markets have been the subject of the year 2023 for sure,” says Pierce. “In commercial real estate, we've all enjoyed real estate interest rates being at almost zero for decades. And quickly over the last 18 months, those have skyrocketed to now be over 5 percent and near about 5.25 percent”

According to Pierce, that has taken people's variable rate loans and made them triple or quadruple what they were just a year ago. However, the fixed rate debt markets are now below 4.3% as of early December—coming down almost three quarters of a percent.


RELATED:


Development

The “bright light” in the student housing market outlook is that development has slowed down. As lenders have gotten more conservative, developers have found it more difficult to build projects to meet their return expectations.

“The delivery of new inventory this year was below 40,000 beds—the lowest it's been in about 10 years,” says Pierce. This has positively impacted rent growth.

Leasing

Early indications suggest a positive outlook for 2024 with high pre-leasing rates and rent growth surpassing last year. Just 3 months into the 2024 leasing cycle, we're already matching the robust pace of last year with pre-leasing at 42 percent.

“Student housing is a real bright spot in the commercial real estate sector today, and it starts with pre-leasing,” says Pierce. “As a result, there was strong rent growth and it was over 10% for the year.”

Overall

Pierce suggests we’re looking at a “return to normalcy” in the second half of 2024.

“It's going to take some improvement in the debt markets, but there is a strong outlook for investment sales in the coming year.”

Related Stories

Student Housing | Apr 17, 2024

Student housing partnership gives residents free mental health support

Text-based mental health support app Counslr has partnered with Aptitude Development to provide free mental health support to residents of student housing locations.

MFPRO+ News | Apr 12, 2024

Greystar becomes top apartment owner, manager, and developer in 2024

One firm set records for this year’s National Multifamily Housing Council Top 50 roundup of multifamily firms. Greystar now sits at number one in the NMHC’s lists for top apartment owner, manager, and developer in 2024.

Student Housing | Apr 12, 2024

Construction begins on Auburn University’s new first-year residence hall

The new first-year residence hall along Auburn University's Haley Concourse.

MFPRO+ News | Apr 10, 2024

5 key design trends shaping tomorrow’s rental apartments

The multifamily landscape is ever-evolving as changing demographics, health concerns, and work patterns shape what tenants are looking for in their next home.

Architects | Apr 2, 2024

AE Works announces strategic acquisition of WTW Architects

AE Works, an award-winning building design and consulting firm is excited to announce that WTW Architects, a national leader in higher education design, has joined the firm.

Standards | Apr 1, 2024

New technical bulletin covers window opening control devices

A new technical bulletin clarifies the definition of a window opening control device (WOCD) to promote greater understanding of the role of WOCDs and provide an understanding of a WOCD’s function.

Student Housing | Mar 27, 2024

March student housing preleasing in line with last year

Preleasing is still increasing at a historically fast pace, surpassing 61% in February 2024 and marking a 4.5% increase year-over-year.

MFPRO+ Research | Feb 28, 2024

New download: BD+C's 2023 Multifamily Amenities report

New research from Building Design+Construction and Multifamily Pro+ highlights the 127 top amenities that developers, property owners, architects, contractors, and builders are providing in today’s apartment, condominium, student housing, and senior living communities.

Student Housing | Feb 28, 2024

Mary Cook Associates completes interiors for luxury student housing community

Chicago-based interior design firm Mary Cook Associates announced it has completed the interiors of Lapis, a new 1,086-bed off-campus luxury student housing community near Florida International University. 

boombox1 - default
boombox2 -
native1 -

More In Category




halfpage1 -

Most Popular Content

  1. 2021 Giants 400 Report
  2. Top 150 Architecture Firms for 2019
  3. 13 projects that represent the future of affordable housing
  4. Sagrada Familia completion date pushed back due to coronavirus
  5. Top 160 Architecture Firms 2021