From a leasing perspective, the numbers are almost too good to be true. Pre-leasing levels for the upcoming academic year are off the charts — a statement which feels almost saccharine given the past several years have also topped the charts. And to add even further sweetness, occupancy rates in general are peaking and rental rates are growing across most markets, with some hitting double digit growth — a feat in the current economic environment.
And as if it couldn’t get better, properties are leasing up earlier than ever. “The biggest change year-over-year is how strong our velocity was early in the 2024 leasing season,” says Casey Petersen, COO of PeakMade Real Estate. “We had weeks that broke 13-year records for the company and were able to increase our pre-leasing numbers by 20 percent by the end of October.”
“Our portfolio has also experienced strong rent growth year-over-year, with an average increase of 6 percent across the board with some properties increasing rents as high as 14 percent,” adds Petersen. “This is in line with our goals and represents an improvement over last year’s rate growth even in some of our softer markets.”
Jason Fort, executive vice president with Asset Living, agrees, noting that this year’s pre-leasing has been unlike any the industry has ever experienced. “We thought last year was unprecedented, and this year is exceeding where we were last year,” he says. “It’s one of those things you almost don’t want to talk about for fear of jinxing it. It’s a rare time where we’re able to raise rents and pre-leasing occupancy, and our current occupancy is at a place it’s never been before.”
And while the outlook is overwhelmingly optimistic, the question on the industry’s mind is: is this growth sustainable? Are we nearing a turning point? In large, the answer has seemed that yes, it is sustainable, and yes, this is where the industry is headed — at least for the next few years.
Turning Leads to Leases
Numbers this strong mean there is plenty to learn regarding leasing strategy, as the industry has honed its craft and is operating at a near Olympic level. For the Cardinal Group, the highest priority when it comes to leasing is theresident experience. “We believe — and the data shows — that high online reputation assessment scores are one of the biggest indicators of leasing success,” says President of Property Operations and Experience Jenn Cassidy. “Providing a great resident experience means higher renewals and better word of mouth advertising, resulting in lower marketing spend.” (Read more on reputation management on p. 56)
“Word of mouth marketing is still the most trusted advertising source,” agrees Petersen of PeakMade. “Depending on the tier of the market, the impact that word of mouth marketing has on the strategy differs. In Tier 1 markets, we typically have core locations and Class A properties. Our teams at these communities focus on creating an influential customer experience that drives word of mouth marketing and search, resulting in organic lead generation.”
“In Tier 2 markets, we typically see more of a price-conscious renter, which results in a longer leasing process,” he continues. “Because of this, we are consistent with our efforts and require in-person outreach paired with a robust digital strategy. No matter the tier, speed to the lead is critical to high closing ratios, alongside transparency and accuracy in specials and rate changes.”
Understanding each prospect’s specific wants and needs is another key factor in a successful leasing strategy, according to Erin Perez, managing director of revenue optimization for Core Spaces. “It is so important to understand the prospect’s needs early in the conversation and use that information to your advantage when selling the community,” she says. “We ask questions like ‘where are you living now?’ ‘Why are you moving?’ ‘What is most important to you when choosing your next home?’”
“Quickly understanding the prospect’s needs through targeted questions about their current living situation is key,” she continues. “You should always adapt your approach to meet the prospective renter’s evolving expectations, emphasizing aspects of your community that align with their preferences.”
But there is value in creating a standardized approach to leasing that can be tailored to each market, according to Vanessa Young of Landmark Properties. “A top priority we’ve been focused on nailing down is a standardized set of tactics to aid our teams in effectively following up with leads,” says Young, the Athens, Georgia-based firm’s senior vice president of management services, leasing and marketing.
“We acknowledge that the fall season is crucial for building our pipeline, with peak top-of-funnel activity driven by early decision makers joining our communities,” she continues. “During this period we prioritize conversion tactics with texting our leads, recognizing that the current generation responds best to text-based outreach compared to calls or emails. Shifting gears into the spring leasing season, we focus our teams’ efforts on proactively refocusing on outbound marketing tactics, meticulously planning and executing strategies designed to capture new leads,” she continues. “We analyze historical trends to predict high-velocity periods and proactively equip our teams with the resources they need to thrive.”
Balancing Online and In-Person
For most, it seems that successful leasing efforts incorporate the right blend of online outreach and in-person connection. “The past year has highlighted the power of convenience, with students increasingly favoring online options while still valuing the physical experience of a tour and seeing a community in-person,” says Young. “Recognizing the demand for online research and flexibility, we’ve invested in self-guided tours nationally. Integrating our self-guided tours has empowered students to explore our communities at their own pace, either independently or before meeting with one of our leasing professionals.”
An interesting distinction being seen in the leasing process is that many in-person tours are occurring after leases have already been signed, according to Cassidy. “The shift to online leasing feels permanent, however, our future residents do like to come visit when in the market and see the community and model,” she says. “As a result, we are very focused on our digital front door and ensuring our websites are comprehensive and provide the information our prospects want and need.”
“The trend of leasing sight-unseen using digital platforms is on the rise,” agrees Young. “Some drivers we’ve pinpointed of this growing trend are convenience, time constraints and impact from COVID-19. Students — especially international or those out-of-town — value flexibility and the ease of searching and applying online. With tight application deadlines and busy class or extracurricular activity schedules, students are attracted to a quick leasing process.”
As far as digital outreach is concerned, TikTok has proven to be a major boon for leasing to the current generation of students, as they use it with the functionality of a search engine, according to Devan Schaly-Brumbaugh, director of leasing and marketing for The Tailwind Group.
“Students can go to Google and get search results, but you can go on TikTok and get search results where you can see videos of what it’s like when you go inside our properties and what it’s like to converse with the staff,” she says. “Trying to put together captivating but also conversational content on TikTok is really important to appeal to these students so that they can see what the leasing and tour experience is going to be like; what move-in day at the property is like; and when they’re a resident, what sort of events and opportunities for engagement are going to be open to them.”
Growing Trends
So what’s next in leasing? There are a number of trends that are expected to grow — one of which is the adoption of artificial intelligence (AI) technologies. “I anticipate a significant rise in the deployment of artificial intelligence over the next few years,” says Perez. “Integrating AI throughout the entire customer journey — up to the day of move-in — will enable our teams to enhance their efficiency,” she says. “This focus on AI-driven automation will not only streamline operations, but also allow our staff to concentrate more on fostering relationships with prospective tenants, ultimately ensuring a seamless transition for new residents on their move-in day.” (For more on AI, see page 24)
Petersen agrees, noting that renters will become more sophisticated and discerning in their preferences over the next few years. “Leasing AI, virtual tours and remote tours are just a few of the tools that will continue to grow and play a significant role in the student housing space.” He also reiterates that markets will have ups and downs and year-over-year velocity will vary, with certain markets experiencing a rapid leasing process such as Knoxville, Tennessee, and Boone, North Carolina, while others may encounter a slower process like Atlanta or Berkeley, California.”
“At some point, the trend of setting a record every consecutive year will have to end,” notes Adam Byrley, COO of The
Preiss Co. “However that doesn’t mean future years have to be viewed in a negative light. I do expect a bit of softening in the 2025-2026 season, but expect to see rent growth still ahead of pre-pandemic levels.”
“I don’t think we’re going back to the days of 2 percent growth, but I don’t think a double-digit year across the board is in our future either,” continues Byrley. “Certain markets are approaching a bit of a ceiling on the top-end rents, therefore it will be critical for savvy operators to find growth in the rising floor. These operators are the ones that will find the ability to create additional revenue by being very strategic with renewals and ancillary income.”
But for Asset Living’s Fort, the outlook ahead points to more growth. “I think we’re going to see continued growth for the next few years, I don’t see a slowdown,” he says. “The student housing to multifamily gap is closing in. On our multifamily assets, we’re seeing a huge slowdown in leasing, rental rates and occupancy. In student housing, we’re seeing the exact opposite. I’ve been sitting in meetings with clients that have both products, and I’ve been hearing doom and gloom on the multifamily side, but when we talk student housing, it’s rising rents, higgher occupancy and faster leasing than ever.”
“I think we have two or three years at least — if not more — of the same level of growth,” Fort adds. “It’s harder to build from the development standpoint and enrollment is going up. The trends are certainly in our favor. Being a student housing owner is a great place to be right now.”
—Katie Sloan
This article was originally published in the January/February 2024 issue of Student Housing Business magazine.