Why the Sun Belt Is Leading the US Student Housing Boom

The Sun Belt region of the United States, stretching from California through Texas to Florida and the Carolinas, has rapidly become the focal point of the student housing boom. With a confluence of favorable demographics, growing university enrollments, investment influx, and strong economic fundamentals, the Sun Belt is drawing attention from developers, investors, and students alike. Let’s dive into the key factors fueling this surge and why the Sun Belt continues to outperform other U.S. regions in student housing development.

1. Booming University Enrollments in the Sun Belt

Universities in the Sun Belt are witnessing unprecedented growth in student numbers. For instance:

• Texas State University reached a record enrollment of 40,678 students in Fall 2024.
• University of Central Florida boasts an enrollment of over 68,000 students, making it one of the largest public institutions in the U.S.
• The University of Arizona added 3,300 students between 2023 and 2024, a growth of 6.3%.

These rising enrollment trends are driven by several factors: population growth, increased affordability compared to coastal institutions, and strong academic offerings aligned with job market demands. The result? A growing pressure on housing inventory, especially off-campus options, as on-campus facilities are often at capacity.

2. Population Growth and Demographic Shifts

The Sun Belt is experiencing a demographic boom. According to the U.S. Census Bureau, 8 of the 10 fastest-growing cities in the United States are in the Sun Belt. Cities such as Phoenix, Austin, Charlotte, and Tampa are experiencing surges not only in the general population but also in the student demographic.

Why? The region offers warmer climates, lower cost of living, and strong job prospects. This has also made it an attractive destination for families, leading to a rising college-age population. Consequently, institutions are growing and new campuses are being developed, leading to a domino effect in student housing demand.

3. Economic Fundamentals and Affordability

The Sun Belt is known for its business-friendly environment:

• Lower state taxes (or none at all, like in Texas and Florida)
• Lower housing costs compared to Northeast or West Coast metros
• Higher job growth, especially in tech, healthcare, and logistics

These factors make Sun Belt cities attractive not just for businesses but also for students who are cost-conscious. More students are opting to study locally, boosting regional university enrollments and driving a surge in student housing needs.

4. Real Estate Investment and Development Momentum

Student housing has become a hot asset class in the Sun Belt, and investors are taking note:

• In 2024, student housing transactions reached $6.6 billion, up from $3.9 billion in 2023.
• Core Spaces, a leading real estate developer, announced plans to add nearly 10,000 beds across U.S. student markets, many concentrated in Sun Belt cities.

The appeal lies in high occupancy rates, predictable rent cycles tied to academic calendars, and growing student populations. This has led to a flurry of construction activity, with many developers targeting Tier 2 and Tier 3 cities previously overlooked.

5. Occupancy Rates and Rent Growth Remain Strong

Even with a large influx of new properties, the market has absorbed them well:

• For Fall 2024, pre-leasing reached 78.6% by May, slightly lower than the prior year but expected to accelerate over summer.
• Average rent growth was 6% year-over-year, with some locations like University of Mississippi and University of Tennessee seeing increases above 19%.

Strong demand means most student housing properties operate near full capacity during the academic year. This stability attracts both institutional and international investors looking for low-volatility, high-yield assets.

6. Innovative Solutions: Modular & Mixed-Use Developments

To address supply challenges, institutions are embracing creative development models:

• Cal Poly San Luis Obispo announced a $1.2 billion modular housing project to add over 4,200 beds by 2030.
• Xavier University of Louisiana is building an $80 million residence hall to house out-of-state and international students.

Developers are also increasingly incorporating mixed-use elements such as cafes, co-working spaces, and wellness centers to attract Gen Z tenants who demand both functionality and lifestyle amenities.

7. Market Challenges and Policy Constraints

Despite all the growth, the sector isn’t without hurdles:

• Zoning and regulatory issues continue to limit project approvals, especially near residential neighborhoods.
• Rising construction costs, including labor shortages and material inflation, put pressure on development budgets.
• Local opposition, such as that seen in Fayetteville, Arkansas, where a student housing project was denied due to neighborhood concerns, can slow down new developments.

These factors are prompting developers to partner more closely with universities or to locate projects slightly outside urban cores where land and approvals are easier to obtain.

8. Future Outlook: The Sun Belt's Role in Redefining Student Housing

The Sun Belt’s student housing market is only expected to expand further:

• Student enrollment growth in the South is projected to continue through 2035.
• Developers are targeting secondary markets with fewer competitors and untapped demand.
• Institutional investors are creating dedicated student housing REITs focused solely on high-growth Sun Belt markets.

With more universities integrating off-campus housing providers into their ecosystem, the line between public and private student accommodations is blurring. Expect increased collaboration and innovation in the coming years.

Conclusion

The Sun Belt is no longer just a retirement haven or a climate refuge—it is a dynamic, fast-growing educational hub with a thriving student housing ecosystem. From rising enrollments and booming cities to innovative housing models and robust investment, all signs point to sustained growth. As long as universities continue to expand and students seek affordable, high-quality living, the Sun Belt will remain at the heart of the U.S. student housing boom.