Expect Mixed Results For Student Housing This Fall
While the COVID-19 numbers are improving nationally, the debate over whether to require student vaccinations is weighing on the sector. Moody’s analyst Ricardo Rosas cites recent US News data that shows roughly 680 college and universities have vaccine mandates thus far, and of the 200 colleges Moody’s tracks, 37% are requiring vaccinations.
“The recent increase in COVID cases is already causing some universities to reconsider their in-person strategy for the coming school year,” Rosas says in his analysis of the sector. “These factors are creating uncertainty for the student housing sector by putting into question the number of students, their potential tenant base, that are going to be in and around campus.”
Nationally, student housing should expect “mixed results,” he says, with vacancies falling anywhere from 10 bps for properties renting by the unit (from 3.5% to 3.4%) to 20 bps for properties renting by the bed, from 7.9% to 7.7%. Regionally, the Southwest will see the largest vacancy growth for by bed properties, while the Northeast will post the largest vacancy growth for by unit properties. However, “the gains seen are expected to be outweighed on the other end, where the largest vacancy declines for properties by bed are expected in the West where the rate is expected to decrease by 120 bps to 3.8% while the largest vacancy declines for properties by unit are expected in the West where vacancy rate is expected to decrease by 50 bps to 4.5%,” Rosas says.
Rent declines will happen across all regions, though the Southwest is expected to again lead with a decline of 4.2% for properties by bed. The largest decline for properties by unit is predicted for the Northeast, at 4.5%.
On the supply side, inventory will likely grow by 2.4% for properties that rent by bed, inventory is expected to grow by 2.4%, the weakest growth recorded since at least 2014. Conversely, inventory for properties that rent by unit is expected to grow by 1.2%, the largest growth recorded since at least 2014.
“Though we appear to be on the tail end of the recovery from COVID-19 there are still variables which could cause uncertainty for the student housing sector,” Rosas says. “In the short term, decisions of vaccine requirements along with concerns over the delta variant are already impacting the in-person strategies for several universities. While in the long run, a discussion would need to be had regarding the widespread adoption of hybrid classes. All of which would affect the number of students on campus and thus the potential tenant base for the student housing market.”
Source: globest.com
Accessibility