Student Housing Trends & Shifts in 2024

Student Housing Trends & Shifts in 2024

Study Areas Rise in Importance Over Pools in Next Wave of Student Housing

The student housing market continues to exhibit robust fundamentals, despite uncertainties in capital markets. In the United States alone, the student housing investment market has surged past the $10 billion mark and is projected to surpass $14 billion by 2027. Despite a decrease in transaction volume in 2023, experts argue that student housing remains recession-resistant and resilient in the face of current challenges, with expectations of an upswing in 2024.

RealPage Analytics reports that the national student housing sector experienced its strongest pre-leasing season to date as of January. Among the 175 core universities tracked by RealPage, 49% of beds have already been leased for the Fall 2024 academic year, commanding rents 6.7% higher than the previous year, surpassing the previous pre-lease record of 48.2%.

The strong performance is particularly notable within a one mile of campus, where pre-leasing rates reached 49.5% for beds within a half-mile and 48.7% for those within a half-mile to a mile. Top-performing universities such as the University of Tennessee, Purdue University, the University of Arkansas, and Virginia Tech have seen pre-lease rates soar to 80% or higher.

Despite the fact that only 22% of college students live on campus, there continues to be a gap between available beds on campus and student demand, leading to a growing preference for off-campus accommodations. This trend is driven by students’ desire for personal space, which off-campus housing is better equipped to provide. However, research shows that 8.6 million students still struggle to find suitable housing close to their college.

Properties located more than a mile from campus have experienced the most significant rent hikes, with an 8.7% increase compared to 6.1% for those within a half-mile. While these gains surpass pre-COVID norms, they fall short of the rent spikes recorded in the Fall 2023 pre-lease season.

Research conducted by Stanford University highlights a shift in student priorities, with Gen Z placing greater emphasis on academics over amenities such as pools. This trend reshapes investor focus towards providing well-designed study areas rather than extravagant amenities, reflecting a changing landscape in student housing preferences for the foreseeable future.

This data underscores the importance of student housing investments, particularly in understanding evolving student needs and preferences. As the market continues to grow and adapt, investors must remain attentive to these trends to capitalize on emerging opportunities and ensure the long-term success of their investments.

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