Q&A: Why Student Housing Investors Are Homing In on the South
Inside the regional trends creating opportunity both on and off campus, according to RREAF Holdings’ Jack Palms.
As college enrollment continues to surge across the South, student housing investors continue to capitalize on undersupplied markets in this region.
Investors such as RREAF Holdings have been heavily focused on meeting the increased demand for off-campus student housing within proximity to Power 5 schools and Tier 1 research institutions.
Here’s what Vice President of Acquisition Jack Palms told Multi-Housing News about the student housing investment landscape in one of the most sought-after regions in the country.
How has the student housing sector in the south been performing in terms of occupancy and rent growth?
Palms: Performance in the South and Southeast has been strong. There was a slight dip in preleasing in the late spring and summer, but we have seen normalization since then. Year-over-year rent growth and preleasing figures continue to stay strong, although not as aggressive as previous years. The demand for amenity-driven and well-located assets close to Power 5 campuses is still very strong.
LISTEN TO: Student Housing Unlocked Podcast: The Blueprint for Elevating Quality and Maximizing Occupancy
Why is the Southern region such a magnet for student housing investment today? What are some of the factors contributing to its allure?
Palms: There has been a positive net migration to Southern areas for the benefits of a more business-friendly environment, cost of living and warmer climate. With two-thirds of college students staying within 50 miles of their permanent address, enrollment rates in Southern schools have increased.
Students also seek warmer climates and locations near unique destinations and outdoor activities. In early April, Common App Data reported that public schools in the South saw a 63 percent increase in applications—more than double what Northern public schools experienced. Many of these students applying from Northern areas attended school throughout the COVID-19 pandemic and are seeking schools that have more favorable restrictions.
With a shift in students applying to Southern schools and with the higher levels of applications and, therefore, attendance, there will be an increase in demand for both on-campus and off-campus housing. This, paired with the business-friendly environment many Southern areas provide, allows developers to move quickly when acquiring, developing or renovating a student housing asset.
Is supply keeping up with increased enrollment rates?
Palms: Many of the Southeastern universities have suffered from a lack of on-campus housing causing more and more universities to pivot and allow students to live off-campus thus driving the demand. We are often seeing more markets become supply-restrained with off-campus housing, as well.
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Tell us more about some of your properties in this region.
Palms: Currently, RREAF has two student housing properties in Columbia, S.C., and Norman, Okla. Both properties are near major universities and major university attractions such as the football stadium and several other local hotspots. RREAF has a variety of housing accommodations, including townhomes, flats and traditional apartment units. We aim to empower our residents to grow academically and socially through our unique living experiences.
What are your primary criteria when evaluating potential student housing acquisitions?
Palms: Location is a key metric in any real estate deal, and it is particularly important to student housing. Securing the right location that is close to campus and necessities such as grocery stores, medical facilities, gas stations, etc., is crucial for anyone looking to invest in the student housing industry. Catering to the needs and wants of students should always be present when evaluating a deal.
Moreover, students want to be conveniently located in areas that provide ease of living and have top-of-the-line amenities. They want to maintain a healthy school-life balance with areas to study, gyms, pools and common areas for socializing.
Enrollment is also a critical factor to consider when evaluating a student housing deal. A positive enrollment trend paired with an imbalance in supply and demand is a great sign of a potential opportunity.
Besides enrollment, it’s important to look at the universities’ projections for the next five to 10 years. How is the university investing back into the school, programs and facilities? These are all signs that point toward future growth. Will the universities’ projections align with the business plan, and how can you make sure to adjust properly for any risk involved? Also, investigate any upcoming restrictions or requirements that might affect enrollment and, therefore, occupancy.
LISTEN TO: Student Housing Unlocked Podcast: The Equation Behind Success in a Localized Sector
What are some of your expectations for the upcoming 12 months for student housing in the Southern region?
Palms: Over the next 12 months, we anticipate a series of continued rate cuts, a factor that could potentially ignite a surge in interest in development and acquisitions across Southern regions. Investors are increasingly drawn to the Southern student housing market, thanks in part to the growing appeal of universities for students from the North.
Looking ahead to the 2025-2026 academic year, developers and owners will prioritize three key factors when offering student accommodations: amenities, unit mix and affordability. Students are placing greater value on amenities that enhance their living experience, with essentials like high-speed Wi-Fi, in-unit laundry, all-inclusive leases—covering utilities—parking, gyms and communal spaces topping the list.
As housing and food represent the largest expenses for students, we expect to see a rise in mixed-use properties that incorporate dining, retail and convenience options—allowing students to focus more on their studies. Additionally, there’s an increasing demand for one-bedroom units, as many students prefer the privacy and comfort these provide. Overall, students will continue seeking accommodations that combine convenience, essential amenities and affordability.
