Student Housing Opportunity Persists Despite Growth Decline

The aging of the Millennial cohort is placing downward pressure on enrollment, according to NMHC’s latest research.
Image by Gabriel Beaudry via Unsplash

Student housing will continue to be in demand over the next decade. But growth in enrollment will decline due to Generation Z being a smaller cohort than Millennials. The reduced population of students, along with the impact of the COVID-fueled economic downturn, will yield uneven enrollment growth at the nation’s universities and colleges. 

Sophisticated student housing operators able to pinpoint schools with long-term positive enrollment and balanced new housing supply stand to gain over the years ahead.

These are among key findings of two new reports from the National Multifamily Housing Council (NMHC): “Structural Changes in Student Housing Demand,” an examination of the demand forces shaping student housing, and “The Future of U.S. Student Housing Demand,” which offers concrete forecasts of coming demand.

Opportunities exist

“Growth in the student housing population will still occur, but not at an accelerated high rate,” Dave Borsos, NMHC vice president of capital markets and student housing, told Multi-Housing News. “Opportunities will come from picking the right location at a university, and picking the right university, like those poised to outpace overall growth in enrollment, and those in expansion mode, growth mode or with deeper offerings or the right kinds of student offerings. A lot of those are larger four-year public universities.”

Prior to COVID-19, smaller colleges and universities were experiencing declining enrollments, Borsos said. Their fortunes haven’t improved on the back side of the pandemic.

“I think challenges will continue to exist for the Tier III institutions,” he added.

Growth muted

As the Millennial generation has grown older, the college-aged population has declined, resulting in downward pressure on enrollment growth. The reports’ authors forecast enrollment in post-secondary schools will increase annually by 1.1 percent on average.

But while overall enrollment growth will decline, opportunity will exist for discerning developers charting niches where growth is expected to occur.

“Growth will come from cohorts increasing their university education, like the Latin community,” Borsos said. “The overall numbers will be slightly up to flat, but there will be a shift in demographics bolstering overall attendance at universities.”

However, the current administration’s more favorable view of immigration may help accelerate that return, he added.

“The immigrant population coming into the country was affected by policy and COVID, and that muted the number coming to universities,” Borsos explained. “Those universities with historically larger numbers of international students will continue to be challenged to bring international students back.” 

The reports did not touch on private four-year institutions, which don’t have much off-campus housing but do maintain a substantial on-campus housing stock, Borsos said, citing Stanford University and Duke University as examples. While private four-year schools will see greater growth than institutions overall, their off-campus housing stocks mean they won’t offer great opportunity for off-campus development, he concluded.

Earlier this week, CRG and Landmark broke ground on new student housing.