Deal volume in student housing reaches all-time high in 2022

Last year saw a new record high in transaction volume across the U.S. student housing sector, with an annualized total of $18.9 billion in deals, according to JLL.

That’s a whopping 64% jump from the previous full-year high of $11.5 billion set in 2021. According to Teddy Leatherman, managing director of JLL’s Dallas-based student housing capital markets team, part of this jump was due to an influx of interest from foreign-based funding sources.

“We are seeing significant interest from capital coming from the Middle East, Singapore and starting to hear rumblings around Latin America,” Leatherman said. “We are speaking with our global capital teammates on a weekly basis to ensure all foreign capital is getting access to our transactions. Our most successful executions have been global marketing processes.”

Cross-border funding has seen its role in the asset class grow of late, according to JLL. Consider that capital from abroad held a U.S. student housing market share of only 6.7% from 2012 to 2016. From 2017 to 2021, however, this figure ballooned to 20%, with cross-border investors deploying nearly $10 billion into stateside student housing assets.

This flood of capital has helped inflate both per-unit sale prices and rental rates. Student housing rents grew 8.8% annually in 2022, with average monthly rents at $847 per bed in October, compared with $779 per bed in November 2021.

University cities in Sun Belt markets have seen the most new supply come in. The top prelease markets for student housing in the fourth quarter of last year included Tallahassee, Florida (where Florida State University is located); Knoxville, Tennessee (University of Tennessee); Clemson, South Carolina (Clemson University); Austin, Texas (University of Texas); and Gainesville, Florida (University of Florida).

“The fundamentals of student housing have never been stronger, which is why capital is flocking to the asset class,” the JLL student housing capital markets team wrote on the company’s website. “Many investors consider student housing recession-proof as every lease has a parental guarantee, and enrollment has historically increased during times of economic recession. Because of this, in addition to global capital, many domestic investors with capital to deploy are targeting the sector. Institutional investors are steadily increasing their total allocations, accelerating capital flows to the sector.”


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