What’s Next for Student Housing in 2025?
The overall sentiment remains positive, with a few caveats. Industry leaders share their thoughts in the last installment of our outlook series.
Student housing remains one of the most resilient asset types in real estate, despite uncertainty in the capital markets and high construction costs posing challenges to developers and investors alike.
Preleasing remained strong—reaching 94.5 percent—with 50 institutions out of the 200 that Yardi monitors hitting 99 percent occupancy as of September, according to a national report. Southern markets continued to be the most sought-after for development, with the University of Tennessee and Florida State University having the largest pipeline under construction: 3,371 and 2,887 beds, respectively.
“Power 4 markets, flagship public universities and the most highly regarded academic institutions continue to see a consolidation in both enrollment growth and demand for purpose-built student accommodation surrounding the schools,” said Newmark Vice Chairman & Head of Student Housing Ryan Lang.
The sector is also shaped by students’ diversifying expectations which make developers reevaluate the way they build their projects. This year is expected to continue to bring design changes and an increased focus on wellness amenities. The growing investor interest paired with developers’ sense of adaptability are fueling the positive sentiment about where student housing is headed.
Strong interest
Over the past few years, student housing has outperformed compared to other asset types. However, the sector hasn’t been immune macroeconomic challenges, and sector-specific struggles—such as delays in the Free Application for Federal Student Aid process, higher supply in select markets and competition from shadow supply—have resulted in moderate rent growth rates and slowing leasing velocity rates compared to the 2023-2024 academic year, according to Greystar Senior Managing Director of Investments Cliff Chandler. But despite all of this, interest in the sector hasn’t abated.
“Capital in student housing, particularly among institutional firms, remained strong and continued to drive competitive pricing and healthy transaction volume as evidenced by several notable portfolio transactions, including BREIT and Greystar’s sale of a 19-asset portfolio to KKR for $1.64 billion,” Chandler said. Although Greystar sold 25 assets last year, the company continues to invest in properties near institutions with strong fundamentals and limited near-term supply. This highlights another ongoing trend in the market: portfolio consolidation.
Last year was marked by some major deals that showed investors’ unceasing interest in student housing. In March and February, The Scion Group, the General Investment Corp. of Singapore and the Canada Pension Plan Investment Board secured $380 million in refinancing for 11 properties in major university markets including Philadelphia, Gainesville, Fla., and Fayetteville, Ark. The Scion Group was also involved in one of the biggest portfolio deals in 2024. The company paid $893 million for 14 properties adjacent to 13 academic institutions.
Meanwhile, developers haven’t sat on the sidelines either. Most of them are either eyeing new institutions or focusing on diversifying the type of projects they bring to the market. For example, Core Spaces now has multiple developments exceeding 1,000 beds in key markets such as Madison, Wis., Tampa, Fla., and Knoxville, Tenn. The company announced some of the biggest developments in the sector last year.
“Not only does this allow us to bring more beds and diverse unit mixes to market—which allows us to achieve competitive price points and de-risk leasing—but this economy of scale also allows us to create special buildings,” Dan Goldberg, the firm’s president, told Multi-Housing News.
Landmark Properties was also active in 2024, unveiling plans and starting construction on several major developments. In February, the company broke ground on The Standard at Los Angeles, a 1,236-bed project near USC, and later announced plans for three other projects totaling some 3,580 beds in Columbia, S.C., West Lafayette, Ind., and College Park, Md.
Subtext also stayed busy. “Our approach is fueled by data, both from a market and site selection perspective,” said Executive Vice President of Development Mitchell Korte. “We aim to develop projects that outperform competitors by prioritizing prime locations and intentional design.”
The company completed VERVE West Lafayette in Indiana and VERVE Madison in Wisconsin, two communities comprising 751 and 536 beds, respectively, while nearing construction on two other projects that will open this year. Subtext also secured six new projects adjacent to major markets, including the University of Central Florida, the University of Tennessee and Arizona State University, among others.
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But development is difficult, mainly due to the high costs, so public-private partnerships continue to be a popular way to mitigate this challenge. “Universities of all sizes are continuing to seek out P3 developments as a cost-effective way to meet housing demand and reduce their exposure to development, operational and capital reinvestment risk,” said American Campus Communities Chief Development Officer James Wilhelm. P3 projects are evolving beyond purpose-built student housing to include facilities for athletics, hospitality, retail and even affordable workforce and multigenerational housing, ultimately supporting universities and helping communities to evolve.
American Campus Communities leveraged public-private partnerships last year to expand its portfolio by nearly 4,000 beds across six university markets, including Princeton, Emory and MIT. The company received final approvals for a 1,300-bed project in Boston, developed in partnership with Northeastern University.
“We can deliver purpose-built student housing on a faster schedule and at a lower cost than universities can, translating into more affordable housing options for student residents,” Wilhelm added.
Navigating challenges
Besides entering into P3 partnerships to tackle high construction costs, some developers have also been relying more on their in-house construction divisions to complete projects at more manageable costs. Affordability is and will remain a pressing issue for developers, particularly as students face rising costs of living.
Design efficiency can partially mitigate high construction costs and, ultimately, rental rates. Rather than going for the flashiest or latest trends, Korte says his company is prioritizing amenities that serve residents, zooming in on quality, functionality and feel.
“We focus on designing our projects as efficiently as possible, eliminating unnecessary space and avoiding materials or features that don’t add real value,” he explained. Additionally, Subtext targets locations where costs are more reasonable, delivering quality projects without compromising affordability.
However, tailoring developments according to the unique needs of individual markets can become a challenge if developers don’t take their time to understand the local fabric of each location, Goldberg explained. “Purpose-built student housing is not a one-size-fits-all asset class,” he said. By carefully considering unit mix, price sensitivity and amenities, developers can create properties that add long-term value to the communities they serve.
What do students want?
To cater to students’ latest needs, developers have been taking a community-centric approach with their projects, and combined it with experience-based design. Students look for more than just a place to live. They want vibrant communities that cater to their needs and support their educational journey. This change has contributed to the expansion of mixed-use developments that integrate residential units with dining, retail and recreational areas. Technology integration, sustainability, flexibility and convenience, along with a holistic approach to well-being, are all the new norm.
In this context, standing out in a crowded market is becoming more difficult. Goldberg believes it’s crucial for developers to create hospitality-driven environments that make students feel “seen, heard and taken care of.” Core Spaces’ communities include mental health resources and amenity spaces that encourage healthy lifestyles such as yoga and meditation rooms, fitness centers and green outdoor areas.
“We’re moving away from segmented amenity spaces and instead creating open spaces that can be used in a variety of ways throughout the day—grabbing coffee in the morning, studying in the afternoon and hanging out with friends in the evening,” he added.
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American Campus Communities is also integrating flexible spaces into its properties, including social lounges that double as study rooms, courtyards and green areas that encourage residents to get together, and other features that balance functionality with comfort.
Subtext is employing the same strategy in its developments. “We focus on creating ‘places for all headspaces’ that support academics, wellness and social interaction,” said the company’s Vice President of Operations Lindsey Bright. “This includes study lounges, fitness centers and multifunctional gathering areas that cater to students’ diverse needs and moods throughout their time at our properties.”
To contribute to students’ mental health and their overall wellbeing, Greystar introduced gender-inclusive housing and culturally-themed communities, along with inclusive events such as international student meet-ups, language exchange programs, as well as cultural nights. Themed communities such as “STEM” floors encourage students with similar interests to collaborate, whereas “Wellness” or “Global Cultures” communities bring together residents with common backgrounds, shared passions and goals, Chandler said.
Wellness and mental health and well-being are critical components of the student housing experience today. Subtext addresses these needs by integrating fitness centers, meditation rooms and saunas into their locations, while Greystar focuses on establishing peer support networks by providing access to counseling services and wellness programs.
Meanwhile, American Campus Communities and Core Spaces are part of the Hi, How Are You program, in partnership with the College Student Mental Wellness Advocacy Coalition, which encourages open discussions about mental health and community-building events around these topics.
Sustainability is another area of interest for the new wave of students, and this is having a big impact on how developers think about their projects. “Practices like recycling, composting, gray water usage and other eco-friendly features are becoming standard,” noted Wilhelm, who added that there’s also growing interest for multi-modal transportation. “Fewer students are bringing cars to campus, and developers will need to rethink parking solutions and create an infrastructure that supports alternative forms of transportation, like biking, walking and public transit.”
The long-term outlook
The student housing sector is poised for further modernization in the years to come as it continues to show resilience in the face of prolonged economic volatility and high costs.
“Despite economic fluctuations, preleasing rates have remained strong, with many properties reaching full occupancy before the academic year begins,” said Doug Ressler, manager of business intelligence at Yardi Matrix. Ressler reinforced the need for developers and investors to stay up to date with what students expect, and pointed out that technology adoption and sustainability practices will continue to be crucial elements that will support occupancy.
Another trend that will keep gaining steam in 2025 and in the years to come is value-add projects in good locations. “Students continue to show increased appetite to move up from 30-year-old poorly maintained products to the new purpose-built products designed with them in mind so they can live their best lives,” Goldberg said. “We believe that this shadow market product will be either redeveloped into new student housing or repurposed as conventional.”
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Going forward, the sector’s recession-resilient fundamentals will remain a key draw for both institutional and private investors. Student housing is set to maintain favorable operating performance relative to other real estate sectors, but there’s a caveat.
“Given there is a finite amount of quality sites surrounding most of the major universities throughout the country, there will continue to be a premium placed on high-quality assets with pedestrian access to the major universities, bolstering transaction activity and recaps for the short and long term,” Lang said.
Korte believes there will be a growing gap between flagship schools with robust enrollment growth and improving student profiles, and smaller private institutions, which are struggling to attract students. “We expect the student housing market to continue as a tale of two cities,” he said.
