Despite rising interest rates and growing portfolio supply, demand for student housing remains strong.
According to Yardi Matrix data, supply has begun to peak in some areas that have been critical to student housing asset development in recent years. The region including Florida, Texas, Georgia and Pennsylvania represented a total of 18,650 units completed by the end of September of this year.
However, their share increased only slightly compared to 2016 (from 83% to 86%), meaning they are slowly replacing existing stock. Demand continues to grow after a record pre-rental period and rental growth remains strong.
Demand for student rentals in Florida is on the rise as the fall 2022 nationwide pre-rental period ended in September with 96.6% of rooms occupied, marking another record year. Meanwhile, year-on-year rental growth was 4.1% at the end of September, exceptionally high by historical standards.
Major U.S. universities are experiencing an increase in enrollment due to an increase in international students and the influx of local students who have run out of traditional housing options.
Florida: Unstoppable Real Estate Development and Investments
It is the case of the state of Florida, such as the University of Florida and Florida State University, that they continue to see applications increase due to the increase in the population of students who choose to pursue higher education after graduating from high school. This trend has changed the way developers and investors view student housing.
While some fear that this may lead to oversupply and reduced rents in the future, others believe it will only increase supply if promoters build more high-quality services. That they are the ones students want when choosing where to live while studying away from home.
The Sunshine State has seen a peak in enrollments since 2010. In fact, according to the Florida State University Office of Institutional Planning and Research, more than 116,000 new students enrolled during this period, an increase of more than 15%. The current trend shows no signs of slowing: Statewide, enrollment is expected to continue to increase by about 5% per year.
Student Enrollments vs Residential Claims
The U.S. Student Housing Market is growing at a rapid pace, with demand for student housing exceeding supply, according to a recent report from the National Association of Realtors (NAR). The report also revealed that more than half of tenants living in apartments are students.
The NAR noted that the market has grown by nearly 10% in the last decade, with annual growth rates reaching 12%, compared to only 5% in other types of rental properties. The report predicts this trend will continue, with demand expected to outpace supply by one million units by 2025.
Investing in student and professional housing in the United States is a good alternative for investors who want to diversify their portfolios with long-term investments that can help them achieve their financial goals.
That’s why it’s important to invest in properties near universities so you can take advantage of this growing market. And that’s what BAI Capital does with its Archer Place real estate development.
Archer Place is a one-of-a-kind mixed-use development for college students and young professionals in the city. Located in Gainesville, steps from prestigious University of Florida. Includes 92 apartments for sale, 164 luxury apartments for student rent, and commercial areas for rent. Currently considered one of the most relevant buildings of recent years in the area.
We are a boutique company with over 12 years of experience in the U.S. market, and have been helping investors like you enter this space for some time. Visit baicapital.com and fill out our forms; an agent will contact you shortly.