Student Housing Gains Major Market Share in U.S.

3 min read

The market has gone from niche to significant over the last 20 years, according to a new study from NMHC.

Image via Pixabay

Privately-owned student housing developments have grown into a formidable market force within rental housing over the past two decades, according to a just-released report from the National Multifamily Housing Council.

NMHC estimated that student housing rentals represent about 7 to 12 percent of the total U.S. rental market. The sector performed well last year, as it increasingly attracts cross-border capital, according to an NKF report. But with affordability issues continuing to be a factor, a variety of opportunities exist for investors seeking to make moves in student housing.  

“As the market continues to mature and student demographic growth slows in some parts of the country, investors will need to be better informed to achieve outsized returns,” researchers wrote in the report.

READ ALSO: Sustainable Student Housing Design Case Study

In the white paper, which was prepared by Eigen 10 Advisors LLC, researchers found that the student housing rental market has grown significantly since 2000, as a result of investment from both private and public companies. Of the existing stock of student housing, 78 percent was built over the last 20 years, while 40,000 to 60,000 beds have been added to the market each year since 2014.

There are currently more than 22 million students enrolled in both two-year and four-year colleges in the U.S., and they are a diverse group. According to the report, 40 percent of undergraduates are 23 years or older and half are financially independent from their parents, while 64 percent attend four-year universities.

Among the tens of millions of students, about 8.6 million need rental housing that is close to campus. The balance of supply and demand varies widely between colleges, but many of the universities where enrollment increases have outpaced new supply are in Texas, Arizona and California, according to the report.

Image courtesy of NMHC.


The South and West regions of the U.S. tend to have the highest enrollment numbers, following patterns of population growth. In many of these markets, new construction is concentrated in a few universities over the past few years, as the top 10 schools account for 30 to 40 percent of the new beds each year, according to the report. Where enrollment continues to rise, so does the need for privately owned housing.

College students are on extremely tight budgets. Thirty-four percent of undergrads and 38 percent of grad students in the U.S. earn less than $20,000 per year, leading to higher vacancies at high-end properties, according to the report. Apartment developers looking to go all out on amenities might want to carefully consider the demographics of each specific college.

 And when considering what amenities to include in a property, consider that students are now most interested in those that create “functional, lifestyle efficiencies,” according to the report. Those include laundry, parking, washers and dryers, Wi-Fi, the inclusion of utilities in rent and furnished units. Relatedly, money-conscious students could benefit from a mixed-use student housing property that offers fast, low-cost food concepts, which are rated as high quality on college campuses.

“Future investors will need to better understand student preferences for location, amenities and cost to successfully navigate this maturing market,” the report concluded.

You May Also Like

The latest multifamily news, delivered every morning.

Latest Stories

Like what you're reading? Subscribe for free.