US Student Housing Market: Evolution & Opportunities

The United States is among the top study destinations for higher education. Generational shifts continually redefine student needs and preferences, thereby shaping the US student housing market in 2024.

The student accommodation market in the US continues to evolve and expand with changing student preferences. This blog analyzes the evolution of the student housing market in the USA in recent years. Moreover, investors and property operators can gain insights into key growth factors in this sector, unlocking new market opportunities that lie ahead.

How Has the US Student Housing Market Evolved Over the Years?

The global student housing market has been on its growth projector in recent years. Student accommodation in the US specifically has experienced tremendous growth since 2018-19.

This academic year marked a peak in US student housing expansion, setting growth standards for the market today. The post-COVID recovery in the US remained stable for this sector, witnessing a notable increase in investment and development activity thereon. Here are the factors contributing to the growth of US student accommodation:

1. Steady student enrollments: Student enrollments have rapidly increased in the past ten years owing to integrated courses offered by esteemed colleges in the country. According to recent research by Statista, college enrollment projections are expected to observe a steady increase from 14,090,000 million in 2024 to 14,780,000 in 2031.‍

2. Increase in investment & development activities: With a projected total return of 9.5% for the US student housing market, transactions have remained active in recent years (Source: CBRE). Investors and buyers are consistently mapping new territories in the US, especially in areas with high student demand.

For instance, California is a lucrative market for property owners looking to expand their student housing business prospects. Student housing project developments have also picked up pace due to increased investment activity in the Southwest region.‍

3. Expansion of off-campus student housing: Modern amenities and proximity to campuses are extremely important for students. Despite the high preference for on-campus housing among students, only 22% reside in these accommodations due to limited availability. As a result, off-campus student housing performance has improved since Fall 2019. Steady occupancy rates and strong rental growth indicate more growth opportunities in the US student housing market.

5 Pivotal US Student Housing Market Opportunities in 2024

The student accommodation market in the US presented new opportunities in 2024 for key stakeholders. Whether for property operators, investors, or developers, this lucrative market can help achieve high returns on investment. Key factors for this stability include steady growth in the international student pool and the trend of higher education in the US. Here are a few US student housing market opportunities currently flourishing in 2024:

#1 Positive Investor Interest

The investment value of the US student housing market surpassed $10 billion in 2024 and is expected to reach $14 billion by 2027 (Coldwell Banker Commercial). Moreover, the US market marked an all-time high transaction volume at $18.9 billion in 2022. Student accommodation in the US has remained in high demand, attracting investors towards this market.

Specifically, in 2024, private purpose-built student housing projects have been on the rise due to the gradual increase of investment values in this sector. This positive investor interest from global stakeholders is driving the student accommodation US market forward.

#2 Key Players & Growth of Public-Private Partnerships

Key players operating in the student housing USA market include American Campus Communities (ACC), Harrison Street, the Scion Group, Greystar, Core Spaces and various others. Blackstone holds the major market share, acquiring ACC in 2022 for approximately $12.8 billion. According to the US International Student Housing Report 2023-24 by amber, ACC has completed over 115 public-private partnership (PPP or P3 student housing) transactions with 65 colleges & universities.

Key property operators in this market are also expanding into new territories in the US. The growth in acquisitions and increase in P3 projects are boosting the overall US student housing market valuation in 2024.

#3 Growth of Construction Pipeline

The construction pipeline of student accommodation projects in the US has maintained a stable growth rate in recent years. A total of 199 properties are under construction, comprising a combined portfolio of 109,500 beds. According to Berkadia, the Southeast region leads with the highest number of US student housing properties, comprising an overall portfolio of 36,700 beds.

The rising disparity of supply and demand in top universities has driven new private student housing projects. An increase in investment activities across the country marks steady growth of overall student accommodations in the US in 2024.

#4 High Rental Yield & Return Potential in US Student Housing Market

The national average price per bed in the US is $98,427. This price reaches up to $111,400 for premium student housing located less than 5 miles from major campuses (Source: Berkadia). The average national rental growth year-on-year has been 9.75%, while a robust rental yield of 9.97% has been observed.

According to amber’s latest US student housing report, the Northeast led the market with a 9.97% rental yield, whereas the Southern region recorded the highest Y.o.Y. rental growth at 12.15% in 2023-24. This consistent growth in rental yield has been instrumental in shaping the current US student housing market.

#5 Technology Integration & Sustainability Initiatives

Modern design structures and technology integration in student housing property management have significantly evolved. Currently, the demand for amenities like high-speed internet, digital locking systems and online rent payment options remain extremely important for students. Moreover, sustainability initiatives in the US are on the rise, with more focus on environmental conservation.

The US Green Building Council (USGBC) issues LEED certificates based on set criteria intended to reduce the environmental and energy resources used in building construction, maintenance, and operation. For example, Michael Student Living and UC Davis partnered to deliver the biggest LEED-certified projects with 4,800 beds (The Green Village and Orchard Park) in 2022-23.

US Student Housing: The Road Ahead

The growth of student housing in the United States has been driven by high enrollment numbers, opening doors for more investment activities. This lucrative sector will remain stable, with projected investment values expected to reach new heights in the coming years. Property operators need to capitalize on emerging trends to ensure sustained growth. To stay ahead of the student housing curve, operators can list their properties with amber for personalized market penetration strategies and revenue optimization.