This article is part of the 2025 Mid-Year Housing Industry Update. Click here to read the full newsletter.
Despite broader economic headwinds and a slowdown in new development, student housing remains a resilient and attractive asset class. The past year has seen notable portfolio transactions, reflecting investors' continuing interest in student housing. Developers are also active and adaptable, targeting new markets and diversifying the types of projects they bring to market.
Purpose-built student housing is a growing focus. Students today are savvy, socially conscious real estate users looking for more than just a room to sleep in; they seek communities that enhance their student experience and wellbeing. Many institutions and developers are revisiting their housing strategies, leaning towards sustainable, tech-enabled, and community-oriented living spaces. There has been an expansion of mixed-use development, integrating residential units with retail, dining, and recreation spaces, as well as wellness amenities and programming. Students today are also concerned about sustainability and environmentally responsible features have become standard expectations. To stand out in this competitive asset class, it is essential to listen to and understand the values of today's students.
Affordability is a critical issue for all stakeholders, including developers facing higher and unpredictable construction costs, universities confronting uncertain economic challenges, and students navigating rising living costs. While many students seek rich amenities, there is also a significant category of students looking for affordable housing due to current economic challenges faced by many families.
Additionally, while not specifically a student housing phenomenon, we continue to see consolidation in the higher education industry. As institutions face financial pressures, many are reevaluating their real estate portfolios and exploring ways to monetize underutilized assets, reduce overhead, or align holdings with shifting enrollment and academic priorities. Depending on the structure employed, these transactions can impact university-owned and university-adjacent real estate, including student housing. We anticipate more of this trend over the coming year.
From a legal perspective, there are increased complexities surrounding student housing development and management. Universities and developers must navigate a host of regulatory issues. The rise of purpose-built student housing developments has led to more detailed lease agreements and increased attention to the legal nuances surrounding rental agreements, liability, and student privacy.
Amid these trends, universities are navigating increasing uncertainty in today's political climate. Shifting public funding priorities, policy debates over higher education, and heightened scrutiny of institutional decision-making are creating new challenges for long-term planning. These dynamics may influence housing strategies, public-private partnerships, and the overall stability of the student housing market. As these factors unfold, adaptability and sound legal guidance will remain essential for stakeholders across the sector.
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