Sector Spotlight: Student Housing May be Positioned to Defy the “Demographic Cliff”

Student housing has continued to stand out as a resilient real estate sector, even as the U.S. approaches a “demographic cliff.” With the college‑age population expected to decline beginning this year, many are questioning whether student housing can maintain its historical outperformance.

We believe the short answer is yes. In fact, the sector’s fundamentals, demand drivers, and countercyclical qualities suggest that student housing is likely to remain a compelling real estate strategy in the years ahead.

Persistent Demand Despite Demographic Decline

Although the number of high‑school graduates is projected to fall by 12.5% through 2041,[1] demand is not evenly distributed across institutions. RealPage Top 175 Universities are projecting a 7.7% enrollment increase between 2019 and 2029.[2] This further emphasizes how demand is consolidating around top‑ranked universities, especially those in Power 4 conferences (Big Ten, SEC, ACC, Big 12), where institutions continue to post:

• Stronger enrollment growth
• Lower acceptance rates
• Faster preleasing velocity
• Higher occupancy rates

From our perspective, this concentrated demand means that university and asset selection remain critical for continued performance. The strongest performers have generally been well‑located assets near Power 4 universities, within a half mile of campus, and in markets with constrained supply and stable or growing enrollment.[3]

Historically Limited New Supply Bolsters Occupancy & Rent Growth

In our opinion, supply constraints are one of the strongest tailwinds for student housing performance. Elevated construction costs and high interest rates suggest this muted pipeline will persist for the next several years. Annual new‑bed deliveries fell from an average of approximately 102,000 (2015–2019) to approximately 46,000 in 2025, a dramatic 55% decline.[4]

This imbalance between supply and steady demand, particularly at Power 4 schools, has led to meaningful rent growth, with rents, on average, increasing over 100% throughout the last decade.[5] 

Rent Growth Change Over Last Decade[5] 

International Students Provide a Reliable Demand Buffer

The U.S. has been the top global destination for international students, hosting more than 1.1 million in the 2023/2024 school year.[6] Even with short‑term fluctuations, international enrollment has continued to support demand at major universities.

International students have contributed disproportionally to housing demand because they have been:

• Less likely to commute
• More likely to require purpose‑built housing
• More inclined to choose top‑ranked institutions

This flow has helped offset declines in domestic enrollment, which we see as an important stabilizer during demographic downturns.

The student housing sector has a record of resilience, delivering positive performance through recent commercial real estate downturns.

• Rent collections exceeded 98% in 2020,[7] even when conventional multifamily struggled.
• During the Great Financial Crisis, student housing outperformed traditional multifamily and maintained strong returns during recovery periods.[8]

These patterns underscore student housing’s countercyclical nature, which we see as a valuable trait when the broader real estate market experiences volatility.

Institutional Capital Is Increasing

Interest from major institutional players, including global firms like Morgan Stanley and Global Student Accommodations (GSA), has been accelerating.[9] In our opinion, this movement signals growing confidence in the sector’s long‑term fundamentals and reflects the sector’s continued maturation into an institutional asset class.

A Sector Built for the Long Term

Student housing has continued to distinguish itself as a resilient and strategically attractive real estate sector. With durable demand, constrained supply, strong performance through economic cycles, and fundamentals anchored by top‑tier universities, student housing has provided a rare combination of stability and diversification. Our research underscores a clear takeaway: we believe student housing is uniquely positioned for continued growth, making it a compelling avenue for those with a long-term real estate mindset.