Triad Real Estate Partner’s Student Housing Market Conference Showdown: Southeastern Conference Edition

Ryan Tobias, co-founder of Triad Real Estate Partners. Ryan Tobias, co-founder of Triad Real Estate Partners.

With March Madness lingering in the air, we at Triad Real Estate Partners wanted to take a look at some student housing analytical data based on athletic conferences. While the Southeastern Conference is generally known for its members’ prowess on gridiron, the SEC placed an impressive eight teams in the NCAA basketball tournament this year — a strong showing for any conference and the most in SEC’s long and storied history. In light of this accomplishment, we decided to make the SEC the first of a recurring look into ranking the student housing markets at each conference’s schools.

We looked at the data from Axiometrics’ University Reports for all 14 member schools, but ultimately left out Vanderbilt University, due to its undergraduate on campus living requirement and lack of true purpose-built, student housing. For the remaining universities, we looked at seven factors although the most heavily weighted statistics were enrollment growth, occupancy, pre-lease, pipeline and rent growth. As the saying goes, the strongest indicator of future behavior is past behavior — as such, current occupancy and prior years rent growth weighs heavily. The supply side is something that is coming up more and more frequently, so we have weighed pipeline additions as a percentage of overall supply heavily as well. On to the rankings:

Rank

University

Score

1

University of Florida

95.48

2

University of Georgia

92.31

3

University of South Carolina

89.15

4

Auburn University

88.62

5

University of Alabama

88.09

6

Texas A&M University

87.57

7

University of Tennessee

73.85

8

University of Arkansas

72.27

9

University of Kentucky

66.99

10

Mississippi State University

65.41

11

University of Missouri

52.22

12

University of Mississippi

49.06

13

Louisiana State University

34.82

At the top are the Gators of the University of Florida. UF has had modest enrollment growth but very strong rent growth over the past five years (20 percent). Occupancy is a very healthy 96.2 percent across the board and the school scored average or better in virtually all categories. Next, and just a couple points behind, is the University of Georgia Bulldogs. UGA has had very modest rent and enrollment growth over the past half-decade, 7 percent and 5 percent respectively, but a moratorium on new student housing has helped shoot occupancy up to a league best 98.7 percent with no supply in the pipeline. Student housing in Athens is poised for really strong future occupancy and growth.

On the flip side of the coin, at the bottom of the list you see the University of Missouri, Ole Miss and Louisiana State. Mizzou has had well documented enrollment declines after protests and strife scared some students away the last two years. They rank near the bottom for rent growth, enrollment growth and occupancy, scoring well only in pipeline with no new projects in the works. The Ole Miss Rebels have had enormous enrollment growth, over 38 percent in the past five years, leading the SEC. However, they’re also leading the way in new supply. With 1,200 more beds coming online in coming years, they’ll add another 19 percent to existing supply, most in the conference. This has led to overall occupancy of just 79.3 percent and a pre-lease under 30 percent. And then there’s LSU, missing the NCAA tourney and last in the student housing game. The Tigers have had very modest enrollment growth coupled with massive supply gains. It’s the only market in the SEC where rents have actually gone down over the past five years, dropping nearly 2 percent. Market occupancy is just 78.4 percent and the pre-lease as of February, 2018 is just 29.1 percent, last in the conference. Things aren’t looking much better going forward, as there are another 1,300 beds in the pipeline.

In the middle of the pack you see some other interesting data points and a few oddities. Enrollment growth, once the be-all end-all of student housing metrics, is just one factor, and not necessarily a strong indicator of performance. The four schools in the SEC with five year enrollment growth over 20 percent? Alabama, Texas A&M, Arkansas and Ole Miss, collectively with an average occupancy of 84.33 percent, none higher than 85.7 percent (UA). Texas A&M is really in a class all by itself. Rent growth has been an astounding 51 percent over a five year period but that’s largely due to a proliferation of new, high priced product. The Aggie market is just 80.5 percent leased with another 2,500 beds on the way. While that may seem like a lot, the total current supply is nearly 33,000 beds, meaning the A&M market is actually delivering less beds than most as a percentage of the marketplace.    

A few other leaders of the pack in various categories. Georgia leads the way in occupancy at 98.7 percent, while the Auburn Tigers are way out in front on pre-lease at 81.8 percent as of February, 2018, some 15 points clear of the next highest competitor. There are no significant pipeline projects in the Axiometrics database at Georgia, Mississippi State or Mizzou, bolstering their future prospects. The highest rent in the conference, surprisingly, goes to LSU at $636 per bed. How many gift cards it takes to get to that number is unclear. At the bottom of that list is the MSU Bulldogs at just $447 a bed. As mentioned above, A&M is way out in front on rent growth, averaging nearly 10 percent per year over the past five years, but it is hard to discern how much is related to new deliveries versus same store sales.

Well, there you have it, the results to Triad Real Estate Partner’s Student Housing Market Conference Showdown: Southeastern Conference Edition. While certainly a bit less exciting to most readers than the results on the football field or the hardwood, nonetheless a fascinating look into the SEC for the student housing investor.

 Ryan Tobias is the co-founder of Triad Real Estate Partners, a boutique student housing investment sales firm based in Chicago. Since 2005, Ryan has been involved in over $1 billion in student housing transactions across the country.

Methodology: All data from Axiometrics. Study looked at enrollments and rents for private off campus purpose built student housing from 2010-2016. Occupancies, pre-lease figures and total supply numbers from February 2018. Pipeline data for 2018-21. Weights for scoring assigned as follows: 2010-2016 Enrollment Growth: 10 percent, 2016 Total Enrollment: 5 percent, Feb 2018 Occupancy: 25 percent, Feb 2018 Pre-Lease: 15 percent, 2018-21 Pipeline as Percent of Feb 2018 Supply: 20 percent, Average 2016 Rent/Bed: 5 percent, 2010-2016 Rent Growth/Bed: 20 percent. Score calculated using each school’s rank in each category and weighted according with the above. That number multiplied by 10.55 to approximate a 100 point scale.   

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