Student housing continued its rapid rise into the mainstream of real estate sectors in 2015, with impressive gains in prelease and occupancy rates, and increased investments. Though Fall 2015 deliveries fell short of the record set in 2014, tens of thousands of new beds came to market, many of them serving universities that had not seen new supply in a few years, according to Axiometrics’ analysis of student housing trends.

After two days of assessing the top stories in the conventional apartment industry, Axiometrics’ blog editors and Analytics team put their heads together and developed the following countdown of the most impactful student housing stories of 2015: 

5. P3 Popularity Increases

Student housing public-private partnerships (P3, as it is often abbreviated) really sank into the sector’s consciousness in 2014, as the University of Kentucky and the University System of Georgia entered into agreements that attracted much attention.

Even more such partnerships were developed in 2015.

The largest alliance may be Nicholson Gateway at Louisiana State University, which will be more than the planned 1,670 student housing beds. The 28-acre development across from Tiger Stadium is expected to include 30,000-50,000 square feet of retail, restaurants, study areas and meeting rooms. The entire project is slated for Fall 2018 completion.

American Campus Communities, one of the top student housing REITs, and RISE Real Estate, which built residence halls at several Louisiana schools, are the finalists for the LSU partnership. LSU decided in November to expand the partnership to include an opportunity to bid on replacing six residence halls built in the 1960s with 2,100 new beds, offering more student housing solutions.

Among other large deals:

• Texas A&M University is partnering with Servatis, LLC to develop and manage the $360 million, 3,400-bed Park West apartment property on campus, which is scheduled to open by Fall 2017. A newly created non-profit will own the development for the first 30 years of its life, after which ownership will revert back to the university. The project is expected to comprise three multistory buildings.
• The University of South Florida and Capstone-Harrison Street are combining to build a $133 million “residential village” that will replace several 1960s-era residence halls with 2,171 new beds. The net addition would be about 1,132 beds. Completion is slated for Fall 2018.
• Eastern Kentucky University is establishing a P3 to build a $75 million, 1,110-bed project. Grand Campus Properties and F2 Companies will split the private part of the partnership. 

4. Campus Crest Likely Going Private

Just like in the apartment REIT sector in 2015, the number of publicly traded student housing REITs will likely decrease in 2016, should the announced $1.9 billion sale of Campus Crest Communities to the privately owned Harrison Real Estate Capital close. Campus Crest shareholders are expected to vote on the deal in January, with closing expected in the first quarter of 2016.

The definitive agreement was announced in October. Campus Crest, which owns 79 student housing properties with more than 42,000 beds, announced in December that it would soon close its Charlotte headquarters.

American Campus Communities (ACC) and Education Realty Trust (EdR) will be the two remaining publicly traded student housing REITs. 

3. Investors Flock to Student Housing

The ascension of student housing into a viable, mainstream real estate sector is evidenced by the number of institutional investors ready to put their money into privately owned student housing properties.

In fact, 2015 will likely bring $4.5 billion in student housing acquisitions, according to a Dec. 14 article in “National Real Estate Investor.” That figure represents a 50% increase from the $3 billion worth of property sold in 2014.

Several industry experts have happily proclaimed that student housing is no longer simply a niche sector, and institutional investors have accounted for almost half of the 2015 acquisitions, according to Real Capital Analytics.

High occupancy, ever-growing prelease rates and general strong performance are attracting these investors – as is the price of student housing properties, which usually are considerably less than conventional apartment developments. But cap rates are lower, as well, averaging 6.1% in the third quarter of 2015.

Not to mention, investors now have a better understanding of student housing.

International investors – primarily from Europe and the Middle East -- also are learning the benefits of U.S. student housing, according to panelists at an investment roundtable conducted at the Interface Student Housing Conference in April. 

2. New Supply Less than 2014, but that’s Good

Some 47,394 new beds in privately owned student housing properties were delivered in time for the Fall 2015 semester, the third highest rate ever. Though the new supply was 24% lower than the 63,000 beds delivered for Fall 2014, it simply means that supply slightly caught up to demand.  

That 2015 supply, however, is serving different universities. About 30% of the universities to which new supply was delivered this fall had not received any new beds in the past four years, and about 44% did not receive any new deliveries in 2014, the student housing trends show.

Of the 77 universities that received new beds in 2015, 28 are expecting more deliveries for Fall 2016, while 49 will skip the next go-round. The Southeastern Conference appears to be leading the 2015-16 beds race, with LSU seeing the most beds come to market for both 2015 and the two years combined. Texas A&M is second, and the University of South Carolina is third. The University of Arkansas is expecting the largest number of new beds in 2016.

So far, 43,149 beds have been identified for Fall 2016 delivery, with another 3,000 beds planned but not yet under construction. 

1. Prelease, Occupancy Outpace Previous Year

Privately owned student housing properties began the 2015-16 school year at a prelease rate of 95.7% for August 2015, outperforming the August 2014 rate of 95.2%. The velocity of 2015-16 preleasing averaged at above the 2014-15 pace throughout the leasing season, meaning that students and their parents were finding student housing solutions.

Meanwhile, student housing properties were 96.3% occupied at the end of November 2015, 50 basis points (bps) higher than the 95.8% of November 2014.

Student housing closer to campus had the highest occupancy. Beds less than a half-mile from campus were 96.7% occupied, while occupancy at properties a half-mile to one mile away was 95.1%, and those more than one mile away were 95.0% occupied.

Looking ahead to 2016, preleasing was 15.5% as of November, ahead of last November’s 12.5%.