Park Place Tempe

1317 South Terrace Road, Tempe, AZ, 85281, US

Asset description

Jones Lang LaSalle Americas, Inc. ("JLL") is pleased to present Park Place Tempe ("Park Place" or the "Property"), a 285 unit, 781 bed student housing community serving Arizona State University ("Arizona State," "ASU," or the "University"). Park Place is one of five properties at the University built in 2020 or later, and offers pedestrian access to ASU in the top local sub-market for off-campus life and campus access.

Park Place is 100% pre-leased for AY 25/26. The Property currently offers rents at levels below the competitive set; the average rents among local competitors are up to $338 per bed higher than Park Place's rents, offering subsequent ownership the opportunity to achieve outsized rent growth given rapid pre-leasing performance.

Purpose-built student housing at ASU serves just 51% of ASU's enrollment. Rents for AY 25/26 will deviate well below conventional product for the first time in over a decade, driving students away from the shadow market and into a tight supply-demand environment. Investors have the opportunity to acquire a coreasset at the fifth largest campus in the nation at a discounted basis due to decreased rents, with significant upside in the emerging market stabilization.

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Attributes

Year built

2020

Units

285

Beds

781

Media

Investment highlights

Tier 1, Power 5 University

Arizona State is one of the most recognized universities in the world with hundreds of academic programs, a large alumni base, and countless #1 rankings. More than 70,000 prospective students applied as first-year students in Fall 2024, a University record. ASU joined the Big 12 in 2023 and participated in the College Football Playoff for the 2024-2025 season, the first playoff appearance in program history.

Largest Undergraduate Student Body in the U.S.

The Arizona State University System boasts the largest undergraduate student enrollment in the U.S. The System welcomed a record 79,818 in-person students in Fall 2024, with 56,643 students in Tempe. Tempe is the fifth largest campus in the nation by enrollment, and increased applicants for AY 24/25 by over 3%, indicative of the allure held by the University.

Significant Rent Upside Following 25/26 Reduction

Park Place Tempe cut rents for the 2025-2026 academic year by 17%, leading to 100% pre-lease occupancy by May. Rates for AY 25/26 at the Property are up to $338 per bed below the average of comparable properties. Given the strength of pre-leasing at current rates, new ownership is offered the opportunity to achieve outsized rent growth while remaining well within the market. At average rent growth of 6% for three years, rents for AY 28/29 at Park Place will remain at a discount to 24/25 rates.

Discount to Replacement Cost

Given the rapidly increasing cost of construction, development equity is no longer committing to projects in the pipeline. To achieve a 6.75% return-on-cost, new development would need to achieve rents approximately 2x Park Place’s 25/26 rents. This delta shows the Property is being offered at an attractive basis that’s a steep discount to replacement costs, and it proves how unlikely any projects in the development pipeline will be capitalized if they’re not already under construction today.

Fundamental Tailwinds Will Reward Early-Movers

Park Place is a case study in the stabilization of market rents and subsequent recovery to occupancy. Pre-leasing occupancy at ASU has reached 84% in May, just 3% below 24/25 occupancy. There are currently 28,629 purpose-built beds serving ASU, versus over 56,500 students. Once developments in progress complete, ASU will be left with an empty supply pipeline and a supply deficit of over 23,500 beds, assuming flat enrollment. Further, reduced rents in 25/26 will create the largest difference between student and conventional rents in over a decade, driving further demand for purpose-built student housing. Investors that buy now will be rewarded as the market moves towards 95% occupancy – the 10 year average from 2014-2023.

Arizona Licensee

Benjamin Geelan

License #: AZ-SA651991000

602.648.8712

ben.geelan@jll.com