Still at the Head of the Class: Student Housing in 2026

January 30, 2026

Student Housing Development Featured Finance & Investment More National

The sector’s next phase will favor scale, experience and disciplined market selection.

The student housing sector enters 2026 with a high degree of confidence. After several years of testing, marked by economic volatility, shifting renter sentiment and constrained capital, the sector has largely held its ground. That resilience is reflected in the most recent preleasing cycle: Estimated occupancy for the 2025–2026 academic year reached 95.1 percent, one of the strongest performances in recent years, according to Yardi Matrix.

“We remain very bullish about the sector but recognize the need to focus on specific markets and specific locations within submarkets,” said Kevin Larimer, senior managing director with Berkadia.

That selectivity is increasingly evident in how capital is being deployed. Investment activity has normalized, lenders are competing again and more deals are penciling out compared with last year. Even so, momentum remains concentrated in familiar territory: top-tier universities, supply-constrained markets and highly amenitized projects in walkable locations.

Looking ahead, longer-term demographic forces and policy considerations are moving closer to the foreground. Questions around international enrollment—particularly visa uncertainty—and potential funding cuts could influence demand patterns, though it is still early to assess the full impact.

The issue, then, is not whether student housing fundamentals will remain strong. In 2026, performance will hinge on precision: selecting the right institutions and locations, aligning with the right partners and executing with a disciplined, market-specific playbook.

Capital returns—with discipline

Investment activity in the student housing sector is “rapidly improving,” according to Larimer, though the recovery is far from uniform. The distinction lies in where capital is being deployed, specifically in markets and assets where investors believe they can underwrite through volatility.

“Capital is continuing to concentrate around P4 and large G5 markets with a specific focus on value-add,” noted Travis Prince, senior managing director at Berkadia.

That selectivity became evident in last year’s transaction activity. A fund managed by Morgan Stanley Real Estate Investing partnered with GSA to acquire a $1 billion, 6,200-bed portfolio near Tier 1 universities. Also, Kennedy Wilson acquired Toll Brothers’ Apartment Living platform, which included student housing assets, while GSA secured $500 million in refinancing for a 23-property portfolio near major institutions. Across both acquisitions and recapitalizations, the common thread has been lenders’ willingness to support assets with strong operating fundamentals.

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Debt markets have followed a similar trajectory. “The debt markets are robust,” said Berkadia Managing Director Aaron Moll. Banks, he noted, have materially improved their terms and are once again underwriting standard real estate transactions rather than requiring deposits simply to consider new loans. Agency lenders, meanwhile, are expanding their allocation to student housing, drawn by strong loan performance and competitive returns.

Still, some market participants are urging caution. Kennedy Wilson Head of Debt Investment Tom Whitesell pointed out that despite recent Federal Reserve interest rate cuts, “it isn’t clear yet what effect that might have on longer-term rates.” As a result, the firm is prioritizing careful evaluation of initial lease-up and ongoing operations, while partnering with experienced developers in each market to ensure that “repayment through a refinance or sale is achievable.”

Where enrollment growth is steering capital

As capital returns selectively, demand in the student housing sector is becoming more concentrated and more closely tied to enrollment trends. Ben Mohns, partner & global head of asset management at Harrison Street Asset Management, pointed to a long-term shift that is now shaping both investment strategy and development focus.

“In the last five to 10 years, we have observed university enrollment patterns shift to favor primary, flagship public schools,” he said.

With enrollment serving as the primary engine of student housing demand, investors and developers are increasingly gravitating toward these institutions, and that concentration is reinforced by supply dynamics.

“Markets with strong enrollment growth coupled with a limited supply pipeline are attracting the most attention,” noted Prince.

As a result, student housing demand is becoming even more localized, with several high-profile projects illustrating the shift. For example, The University of South Florida in Tampa, which registered record-breaking enrollment in the summer and fall of 2025, has drawn interest from investors such as Core Spaces and Harrison Street, which recently unveiled plans for Hub Tampa Fowler, a 1,195-bed community that will anchor a four-phase mixed-use district near campus. Texas A&M University, another institution with constrained supply, has similarly attracted major developments, including projects by Subtext and Larson Capital Management totaling 1,738 beds within steps of the university.

At the same time, rising competition in established flagship markets is pushing some investors to broaden their focus. Firms such as Landmark Properties are increasingly targeting high-growth, lesser-known public universities, where enrollment momentum and scholarship programs are reshaping demand.

“One trend we have observed over several years is the growth of certain lesser-known public universities in high-growth states as the top public schools within these states have become hyper competitive,” said the company’s Managing Director, Max LaVictoire.

He pointed to statewide scholarship initiatives as a key driver of keeping students in-state, a pattern that once defined Florida’s student housing market and is now emerging at institutions such as Kennesaw State and Appalachian State. In November, Landmark partnered with HC2 Capital LLC and Peninsula Investments to acquire a 40-acre parcel for the development of The Retreat at Boone, a 625-bed project targeting students at Appalachian State University.

Normalized rents shift focus to experience

Growing competition in the student housing sector is increasingly reflected in cooler rent growth. Operators are no longer pushing the outsized increases seen in the immediate post-pandemic years, opting instead for a more measured pricing approach. According to the latest Yardi Matrix report, rents rose just 0.8 percent year over year, with the average rent per bed reaching $912 as of September. Although this marked a moderation from prior years, demand remained resilient.

“While rent growth has normalized over the course of the 2025-26 preleasing season, the school year started with mid-90s occupancy nationally,” said Mohns.

With most beds filled and occupancy hovering near full, pricing power has not disappeared, but it has become more selective and market-specific. Performance, in fact, continues to vary meaningfully by submarket. LaVictoire noted that while few markets have delivered major surprises over the past year, some have exceeded expectations despite new supply coming online.

“Florida State University has been an example of this, with the College Town submarket continuing to perform very well despite some softness in the overall market from new deliveries,” he said.

As pricing headroom narrows, operators are increasingly leaning on the “why” factor to drive leasing momentum. Experience has become a central differentiator, with amenity and design decisions now closely tied to business plans—market by market, site by site and unit mix by unit mix. In this environment, features such as wellness-focused offerings, outdoor spaces and purpose-built study areas are no longer optional. They are directly influencing leasing outcomes.

“Wellness continues to be a major focus and driver of leasing for residents,” LaVictoire said. “We have adapted our top-of-market fitness facilities to interconnect with Wellness Suites and pool- or spa-type services, allowing residents to access a total wellness experience: mental, physical, longevity and community.”

Outdoor space, in particular, has emerged as one of the most sought-after amenities. Responding to student feedback, Landmark Properties is increasingly designing communities with year-round access to outdoor areas, integrating features such as outdoor fitness equipment and heated patio pavers to extend usability beyond warmer months.

Consolidation, selectivity shape the 2026 outlook

If 2025 was about reestablishing confidence in the student housing sector, 2026 is shaping up to be a year of reordering. Market participants expect enrollment, capital and performance to become even more concentrated around institutions and assets with durable fundamentals.

Larimer anticipates consolidation at directional schools, with larger, experiential institutions benefiting most where enrollment and demand remain strong. LaVictoire similarly expects continued bifurcation in enrollment growth, with top-tier universities pulling further ahead. That gap could widen, he noted, if smaller schools, particularly those reliant on international enrollment, continue to face pressure.

Those enrollment dynamics are already influencing investment behavior. Platform consolidation has accelerated and is expected to remain a defining trend in 2026. Recent transactions—including Kennedy Wilson’s acquisition of Toll Brothers Apartment Living, Yugo’s purchase of Campus Advantage, and Lincoln Property Co.’s acquisition of Capstone Development Partners and Capstone Management Partners—underscore a broader push toward scale, operational efficiency and portfolio depth.

“We will see an increase in portfolio transactions in 2026, driven by both existing investors in the sector as well as large global funds and LPs making their first investments,” said LaVictoire.

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On the operating side, rent growth is anticipated to continue normalizing at the national level, though outcomes will vary widely by market. Harrison Street expects moderation overall, but pockets of outperformance will persist.

“We have seen that some markets with notable supply-demand imbalances are still achieving five to 10 percent rent growth and this could likely remain elevated next year,” Mohns said.

New supply is projected at two to three percent of total stock nationwide, with deliveries concentrated in roughly 15 to 20 markets where enrollment has outpaced bed growth. Even so, absorption is expected to remain manageable. “New supply can likely be absorbed without a significant impact to fundamentals over the long term, although any investment decisions will require thoughtful analysis,” Mohns concluded.

At the same time, 2026 brings new watch points that could heighten selectivity further. Whitesell flagged uncertainty around “mega deals” and “higher and higher bed counts at projects,” questioning whether such developments will continue to attract capital, particularly in high-supply markets. Additional risks tied to foreign student visa policy and research funding could also weigh on demand at certain institutions, reinforcing the need for careful market and asset-level selection.