After the second wave of COVID-19 infections in July, many universities revised their reopening plans and implemented online education by the fall. However, online education did not have a material impact on student housing collection or leasing activities. Student dormitory owners and operators Pierce Education properties reports 97% rental income since classes started in August and less than 1% rental cancellations due to distance learning.
“The no-show rate – students who signed a lease but didn't move in – this year in our portfolio was in line with previous years at less than 1%. The August collections for our portfolio were also very strong at 97% – in August 2019 it was 96%. These trends were not influenced by the type of course processing. " Frederick W. Pierce, IV, President and CEO of Pierce Education Properties, told GlobeSt.com. “This information confirms that students don't want to stay home and miss out on the social aspects of their college experience. They want to be in school even if some or all of their courses are online. In this respect, it has been shown that the autumn performance of our portfolio corresponds to our optimism at the beginning of the year. "
While rental income was not affected, the university's plans and market fundamentals have changed dramatically, especially when compared to Pierce's original outlook at the start of the pandemic. "When universities began announcing plans to reopen in the fall in May and June, optimism was high, with about two-thirds pointing to plans to hold courses either entirely or essentially in person," says Pierce, IV. "Most others envisioned a hybrid approach – some in person and some online. Only 7% planned to be fully online. This strengthened pre-leasing in June and July, which was between 7% and 10% below the pace of the previous year in April and May. "
In July, those reopening plans that had influenced Pierce's strategy changed. "The surge in positive COVID-19 tests in July has resulted in many universities turning their plans to reopen," he says. “According to the ongoing Chronicle of Higher Education survey, only 27% say they work fully or mostly in person, while 21% work in a hybrid model and 34% are mostly online. Yet only a very small minority, 10%, are fully online. "
Overall, Pierce believes that the increase in online education has had a positive impact on his portfolio. "At the few universities that went fully online this fall and closed their dormitories, the leasing speed in these markets increased immediately," he says. “For example, at San Diego State University, in the week following the dissemination of resignation letters due to the closure of six dormitories with social distancing problems, we signed 100 leases to roughly half of students with residential contracts for 2020-21. ”
The state of Michigan is another example of the positive impact on private student dormitory operators. "When the state of Michigan announced the closure of all dormitories in August, our properties closed 170 leases the following weekend," says Pierce. "The bottom line is that students don't like online courses. 67% said they were inferior in a survey in April and they want to live in college regardless of the format of the courses on offer."