Every year, millions of young adults in the U.S. leave their parents’ homes to start their new life as college students, and they all need housing. Many of these students will choose on- or off-campus student halls that offer the opportunity to mingle and form communities with their peers in ways traditional housing does not allow. That makes purpose-built student accommodation (PBSA) a popular asset class among investors. In 2023, the sector attracted 5.7 billion U.S. dollars worth of investments. With supply in the private rental housing market tightening and rents soaring, demand for student housing is poised to remain strong.
Student housing is a cornerstone of student life for any college or university. As students are often not fully employed, access to affordable housing built to suit their lifestyle is crucial. With enrollment going strong, the sector is expected to continue to grow.
There is a shortage of student housing.
The average vacancy rate for off-campus accommodation has declined since before the COVID-19 pandemic, with 2022 experiencing a record-high share of occupied units. The gap between supply and demand is particularly high in some of the largest institutions. Florida International University, which enrolls nearly 57,000 students, has a shortage of over 35,000 beds in on-campus, off-campus purpose-built, and off-campus student competitive properties. Nationwide, eight schools experienced a supply shortfall of over 20,000 beds. Meanwhile, the largest student housing developer in 2023 - Core Spaces - planned to deliver about 43,000 beds by 2027.How much does renting a student apartment cost?
The average rent depends on multiple factors, such as the city, distance from campus, and type of apartment. In the 20 largest universities by enrollment, the average rent in off-campus purpose-built student housing ranged between 600 U.S. dollars and 2,600 U.S. dollars in 2023. Rents in the private rental market have been generally on the rise, but since the COVID-19 pandemic, rental growth has accelerated. Student housing is no exception, with rental growth exceeding eight percent in 2023.Student housing is a cornerstone of student life for any college or university. As students are often not fully employed, access to affordable housing built to suit their lifestyle is crucial. With enrollment going strong, the sector is expected to continue to grow.
