As I explained yesterday, there will be a
rather significant over-supply of housing for JMU students in the fall, with an estimated 1,740 empty "beds" across all student housing options. As a reference point, my calculations show a current over-supply (during this 08/09 academic year) of approximately 1,075 beds.
Why does this over-supply of housing for JMU students exist?- JMU was projected to grow, and a lot of developers started student housing projects to take advantage of this growth. Of note, in December 2007 I pointed out that the the way the media has been counting JMU students might lead student housing developers astray.
- Harrisonburg put a time table (deadline = July 2010) on building student housing development without having to ask for permission. This encouraged (along with the growth projections) many student housing developers to get started immediately.
What effects will we see of this over-supply of housing for JMU students?- Some housing complexes will likely have high vacancy rates next year. Student housing trends from around the country would suggest it will either be the oldest complexes, or those farthest from campus.
- Rental rates may decrease, as landlords compete to find tenants.
Who needs to know about this over-supply, and what should they do?- Student housing developers should carefully consider their planned development timeline to account for an over-supply in the market.
- Owners of student housing properties should position their property carefully in respect to price, included amenities, lease terms, etc.
- Potential purchasers of college student housing should carefully consider the implications of such a purchase in our current market. Those purchasing solely as an investment need to be aware of possible declines in rental rates, and increases in vacancy rates. Those purchasing to have a place for their son or daughter to live should likely still consider a purchase, but should be aware of market conditions.
- Owners of "possible" student housing properties (i.e. townhouses somewhat near JMU, but not in student housing complexes) should consider targeting the non-student market.
The JMU student housing market is entering a new cycle where supply will well exceed demand. Our market has not seen this type of an imbalance in many years, so many of the implications remain to be seen.
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