'As It Happens' Newsletter - Moody's On Student Housing Trends

Updated: Sep 10



On August 19th, Moody’s hosted a webinar to share their thoughts on the general uncertainty regarding student housing, both on- and off-campus.  The webinar was hosted by members of Moody’s commercial real estate group.  While a significant portion of the webinar discussed the impact of COVID-19, there was also significant discussion of other factors that are generating uncertainty for the overall performance of student housing.  COVID-19 Impact  Note: The seminar was held  just prior to UNC cancellation of in-person classes. 

This discussion focused on the overall uncertainty due to the pandemic, especially with most schools operating under multiple scenarios/modes, and the various paths the academic year may take. One analyst shared a broad estimate that between 10-20% of students may simply not show up on campus.  Dynamics within Higher Education.  Moody’s spent a good amount of time discussing the general trends related to international students, demographics, and technology, and highlighted how each may impact enrollment and thus demand for student housing. A key takeaway from this discussion is that Moody’s does not view Higher Education as a growth sector, and suggested that turn around strategies based on growth will be approached with skepticism. Instead, in the face of flat overall enrollment, they view improved performance as more likely to come through operating efficiencies.  The Student Housing Market  Beyond the uncertainty due to the pandemic, Moody’s analytics group was already projecting an increase in inventory, an increased vacancy rate, and a decrease in rent for off-campus student housing. They believe that the market is starting to see the pressure of the increased inventory brought to market over the past 5-7 years. When considered relative to their overall view of no future growth in enrollment, I got the impression that they believe the increase in vacancy rates and pricing pressure will continue for a significant period, potentially putting pressure on competing on-campus housing. 

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