Student Housing Boom! Monthly Rent = $1400/bedroom!

[Scott Dixon]

Curious to see what other BP members are seeing who are active in college rental markets around the country.  Here are some of the metrics from Champaign-Urbana (Home of the University of Illinois).  

New multifamily units in Champaign (citywide) from 2005-2014:

2005: 588  |  2006: 272

2007: 591  |  2008: 245

2009: 80    |  2010: 279

2011: 292   |  2012: 226

2013: 288   |  2014: 818  (That's an increase of 284% of 2014 numbers) 

Source: T.J. Blakeman, based on city of Champaign data

University (UIUC) Enrollment 2005-2014 Total (Grad/Undergrad):

2005: 40510  | 2006: 41180

2007: 40923  | 2008: 41495

2009: 41918  | 2010: 41949

2011: 42606  | 2012: 42883

2013: 43398  | 2014: 43583 

Source: UIUC Division of Management Information

Overall the enrollment is creeping up and I would expect this to continue or even accelerate a bit over the next 5 years to help offset the decrease in funding from the state.  My take is to not try to compete with the new/high-end rentals which are renting from $650 -$1400 per bedroom.  Although I would love to get a property which brought in those type of numbers per bedroom the competition is going to get pretty intense which the increase of units over the past couple years.  Grad students look to be the bright spot in the coming years, with a good number of them living off of their Research Assistantship or Fellowship which is somewhere around $25,000/year.  You can see how most of Grad students are not going to be looking for the $650-$1400 because they simply can't afford the rent.  

*Note:  UIUC has the highest percentage of international students compared to any other public university.  This is where a good number of the students come from who could afford $1400/bedroom/month. 

What are others seeing out in the student housing space?  Similar trends?  What does the future hold, a bunch of properties going cheap when the owners can't fill the units and go belly-up?    

Scott Dixon