If you’ve noticed all the recent construction south of LSU around Burbank and Nicholson drives and thought to yourself that the student housing market has got to be overbuilt, your instincts are spot on.
Vacancy rates for the 17 “class A,” or newer, student housing complexes near LSU are approaching 19%, a stunningly high number, given that the university submarket is typically among the strongest in the multifamily sector marketwide.
When you factor in the 17 additional “class B” complexes near LSU, the average vacancy rates drop slightly, to about 15%, still well above historical averages, according to appraiser Wesley Moore of Cook, Moore, Davenport & Associates.
“We just have a flood of new inventory and there is too much,” says Moore, who specializes in the local multifamily sector and has been compiling data in preparation for the upcoming TRENDS annual real estate symposium. “We were warning about this two years ago, and most of the deals we were talking about then have either gotten underway or been built and it’s starting to show.”
Between 2010-2018, more than 8,900 student beds have been added to the university submarket, including the new LSU-owned Nicholson Gateway complex, which is on campus. That far exceeds the increase in student enrollment during the same period, which is about 1,290.
“That’s a huge difference,” Moore says, noting that LSU’s requirement that all freshman must now live on campus is only exacerbating the problem.
“That’s been good for the Nicholson Gateway, which only has about 3% vacancy right now,” he says. “But it’s coming at the expense of some of the other product.”
Apartment inventory is also rising outside of the university submarket, though not by nearly as much. Parishwide vacancy rates are averaging slightly more than 9.3%; two years ago, they were just 4%, through 2017 was something of an anomaly because many residents were still displaced from the 2016 flood.
An additional 2,400 or so units have been proposed or announced for construction in 2020 and 2021. About 1,400 of those are considered likely to happen, says Moore, though the recent glut of inventory may slow those plans.
In the more immediate future, Moore says renters—especially those in the LSU student housing market—can look for more concessions and better deals when negotiating their leases.