Like virtually everything over the past few months, leasing in the student housing sector has been impacted by the COVID-19 pandemic. Fortunately, the prime leasing season for student housing arrives later in the year, so operators have had some time to adjust.
Pandemic-related closures began during the crux of the conventional leasing season, which has caused traditional apartment operators to modify on the fly. While traffic patterns have also shifted within the student space, the data provides hope and shows student leasing has so far avoided disarray.
According to data specific to Entrata’s student housing clients, the number of new leads per unit in early April was a below-average 0.70. That number has jumped to 0.85 per unit since April 22, which is 23.18 percent higher than at the same time last year. Seasonal fluctuations and campus closures were almost certainly responsible for the slower numbers before the late-April surge.
The primary takeaway for student housing operators is clear: The early-April dip in traffic — and ensuing comeback — give reason to anticipate an increase to usual traffic patterns in June or July as universities begin to reopen for the fall semester. Granted, uncertainty remains based on when colleges are permitted to welcome back their students, but operators should be prepared for what could be a brisk summer.
Adding to the potential workload is that many of those new leads have yet to be converted. Despite the recent uptick in leads, student communities have generated 20 percent fewer leases and approved 28 percent fewer than early May 2019. The approval numbers, naturally, are quite fluid as applicants are in various stages of background checks and screening.
With social distancing protocol still in effect in most parts of the country and staffing shortages remaining prevalent in the industry, student communities will have to further rely on tech-based solutions. Virtual tours and other means for prospects to view a property from offsite will become more common. Remote leasing, in which a prospect tours the community in person while communicating with a remote agent, will continue to be a sought-after option.
Following suit, community teams will aim to utilize software solutions that help them maintain operations while social distancing. That includes call centers to adjust for lack of onsite associates, advanced account verification platforms to quickly authenticate applicants, and pricing tools to help determine reasonable rental rates during a time of uncertainty.
Student communities are also making efforts to respond to the new economic landscape by significantly reducing the amount of fees charged to residents and waiving many that have already been assessed. In early May, communities were posting 61.55 percent less in late fees than at this time last year — an average of only $1.78 per unit. That number is nearly four times lower than Nov. 2019, which at its peak featured an average of more than $6.50 in late fees per unit.
Forgiveness of existing fees has also skyrocketed. Student communities are waiving originally assessed fees at an astronomical rate of 745.46 percent more than at this time last year, which includes a 93.75 percent uptick from an already forgivable early April. The trend began when the nation began to shelter in place during March, and student communities waived $76,000 in late fees during the month. For context, the same communities forgave less than $38,000 in April 2019.
Not surprisingly, a sharp spike in repayment agreements has also been observed during the pandemic. Further showcasing their flexibility, properties generated 2,550 such agreements in a two-week period beginning on April 22, compared to 42 in all of March and 15 in April 2019. That increase should not symbolize gloom, however, as anecdotal data suggests student residents are taking advantage of the flexibility options and paying on payment plans at a faster rate than expected.
While student communities cannot avoid some degree of pandemic-caused impact, they can mitigate some of the effects by modifying the way they market, lease, collect rent, absorb fees and compensate for staffing shortages. A mad dash for student housing certainly could be on the way, and communities will have to have the technology and strategy in place to successfully navigate the rush.
Although an initial sting from the economic ripple effect is inevitable, student housing is a resilient industry that is well positioned to endure the pandemic. By exhibiting a forward-thinking approach, the sector is primed to rebound and continue to capably provide college students with homes and essential services.
— Chase Harrington is president and COO of Entrata.