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Multifamily Market Commentary — November 2019

Fall 2019 Student Housing Update

Over the past decade, the Millennial population — usually defined as those born between 1980 and 1999 and numbering 

approximately 80 million — has largely come of age. As of 2015, 36 percent of people between the ages of 25 and 34 were 

college graduates, up from 24 percent in 1980.

Thanks to so many Millennials attending college, the student housing sector saw a significant increase in investment and 

new supply. However, the tide has been turning in terms of college enrollment.

Total undergraduate enrollment in degree-granting postsecondary institutions, 2010 – 2021

Source: National Center for Education Statistics.

*Note: Represents estimates or projections.

Headwinds for student housing

Student housing sector fundamentals have been moderating as the industry comes to terms not only with declining 

enrollment, but also with the emergence of Generation Z (those born starting in the year 2000, of whom there are far 

fewer than Millennials), declining international student enrollments, and the increasing cost of tuition.

In addition, universities are starting to build more supply on campus, offering sophomores and upperclassmen more 

housing options than typical student housing developments, which are located off-campus. Developers are also changing 

the types of off-campus housing that they are constructing, as Gen Z students appear to be less interested in amenities and 

living in high-rise buildings. Furthermore, public/private partnerships are becoming more prevalent in the sector, offering 

local universities more customized options to meet demand. 

Of these universities, the University of Florida is expected to receive the most new beds — approximately 2,800 beds — for 

the fall 2019 school year. 

In second place, Utah Valley University is anticipating approximately 2,000 new beds for the fall 2019 school year. 

Rounding out the top three is North Carolina State University, with nearly 1,500 new beds.

16,000,000

16,500,000

17,000,000

17,500,000

18,000,000

18,500,000

2010 2011 2012 2013 2014 2015 2016 2017 2018*2019*2020*2021*2022*2023*
© 2019 Fannie Mae. Trademarks of Fannie Mae. 2 of 5

Select universities receiving new supply for fall 2019

University

2019 # of 

New Beds

% of Total Fall 

2019 Delivieries

1. University of Florida 2,782 5.9%

2. Utah Valley University 2,004 4.3%

3. North Carolina State University 1,493 3.2%

4. Texas State University 1,361 2.9%

5. Towson University 1,331 2.8%

6. University of Nevada - Reno 1,270 2.7%

7. University of Alabama - Birmingham 1,252 2.7%

8. Florida International University 1,244 2.6%

9. Colorado State University 1,196 2.5%

10. Rutgers University - New Brunswick 1,167 2.5%

Source: Axiometrics, a RealPage Company

Supply trend moderating

The fall 2019 school year will be the first time that student housing supply numbers have increased — albeit slightly —

since 2014. The sector will see a small uptick in supply for the fall 2019 school year, with about 47,000 beds in the pipeline

— an increase of about 5.8 percent compared to the previous school year. 

Even though the increase in supply is only moderate, we do not expect increased supply to be the trend going forward. A 

preliminary look at next year’s fall 2020 school year shows that supply will likely decrease. Currently, there are 

approximately 52,000 beds in the student housing construction pipeline scheduled to deliver in 2020, according to 

Axiometrics. However, until new projects are moved from the planning stage, it is uncertain when the projects will 

actually complete.

Off-campus student housing beds through fall 2020

Source: Axiometrics, a RealPage Company

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

Completed Under Construction
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Public/private partnerships play a key role

A recent trend has been the role of public/private partnerships, which allow local colleges and universities to partner with 

private developers to build new on-campus student housing developments, thereby replacing outdated dormitories. These 

partnerships are mutually beneficial to each party, as developers who normally build off-campus properties get to finally 

place their buildings on far more desirable on-campus locations. Furthermore, colleges and universities also tend to 

benefit from these partnerships, because they’re able to allocate funds to other areas of need, such as faculty, research, and 

athletics. 

This trend of utilizing public/private partnerships to build new student housing has been gaining traction. In 2014, 

public/private partnerships accounted for $1.4 billion of student housing activity, according to a report from Ernst & 

Young. However, by 2016, that number had more than doubled to $3.1 billion. 

Many universities are showing interest in future public/private deals. Temple University, Louisiana State University, and 

North Carolina Central University are three such universities that are pursuing new public/private partnerships for new 

student housing construction. Earlier this year, multifamily developer Greystar announced a $164 million public/private 

student housing deal at California State University. The project will consist of 284 units and 1,100 beds. 

Generation Z negatively impacting the sector

Of immediate concern to student housing investors and developers is the emergence of Gen Z. Unlike the previous 

generation, the Millennials, the population of Gen Z is much smaller.

According to the National Student Clearinghouse Research Center, as of this year, college enrollment has decreased for the 

seventh consecutive year. Decreasing enrollment is not new to the student housing sector; however, there is new 

significance now, since the first wave of Gen Z students are now freshmen in college. 

Overall, enrollment decreased by approximately 1.7 percent year over year. The category of enrollment that took the 

biggest hit was four-year, for-profit colleges and universities. There was a 19.7 percent decrease in enrollment in spring 

2019 compared to spring 2018 in this category. However, not all of the news was grim, as four-year, private non-profit 

colleges actually saw their enrollment increase by 3.2 percent year over year. 

Unlike their Millennial cohorts, Gen Z seem to be less interested in the high-end amenities that developers were building 

when Millennials were enrolling in college. Many developers are beginning to focus on the shifting needs and wants of this 

new generation. According to some developers, their research has found that Gen Z seem to prefer more garden-style 

properties with fewer amenities, whereas Millennials seemed to favor high rises with plenty of amenities, including pools 

and rooftop lounges. Developers believe that Gen Z students tend to prioritize proximity to campus over amenities as the 

best way to enhance their collegiate experience.

Since Gen Z is expected to be much smaller than the Millennial generation, declining college enrollments should be 

considered the new norm. Declining enrollments could cause developers in the industry to change their approach when it 

comes to new construction and the maintenance of existing stock. Gen Z enrollment in college is also declining due to an

expanding economy offering more options to enter the workforce without a college degree, according to recent data from 

the National Center of Education Statistics.
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Percent change in college enrollment by state

Source: National Student Clearinghouse Research Center and the Wall Street Journal.

A declining enrollment trend among international students

Declining enrollment trends are probably the most responsible for the moderation of new supply in the student housing 

sector. However, it’s not just U.S. student enrollment that’s been on the wane. Declining enrollment from international 

students has been an increasing trend. Considering the revenue uncertainty amid declining enrollment, some colleges and 

universities could be forced to shut down.

 

International student enrollment has declined overall for the fourth consecutive school year. Many schools rely on wealthy 

international students, but that revenue is becoming less reliable as fewer students are enrolling in U.S. colleges and 

universities.

According to the Institute of International Education, as of 2018, international student enrollment from South Korea, 

Saudi Arabia, and Canada has contracted, as seen in the adjacent chart. Furthermore, in the United States, according to an 

October 21, 2019, Washington Post article, Carleton College economist Nathan Grawe predicts that 2026 will be the year 

in which declining enrollments will exacerbate. Dr. Grawe expects that four-year collegiate enrollment will decline by 

nearly 280,000 students per class. This prediction is not welcome news for the student housing sector, especially at those 

colleges and universities that may be relying on wealthy students to stay in business.

-1.7%

-5.2% -5.2% -5.0%

-4.5% -4.2% -4.2%

0

1

2

3

4

5

6

National Alaska Florida Illinois Hawaii North

Dakota

Kansas

% Change in Enrollment

Spring 2019
© 2019 Fannie Mae. Trademarks of Fannie Mae. 5 of 5

Annual % Change of International Student Annual % Change of International Student

Enrollment in US Colleges Since 2013 Origin in US Colleges 2017-2018 

 Source: Institute of International Education.

A new normal?

The student housing sector continues to see a steady amount of new annual supply. Deliveries have decreased annually for 

the past few years, but there was a slight uptick in supply for the fall 2019 school year. The steady performance of the 

sector has allowed for new trends to emerge, some which should help keep fundamentals somewhat stable over the shortterm.

Gen Z has emerged, and they are not as populous as the Millennial cohort. The industry will also have to face ongoing 

declining enrollment and the emergence of a new generation of students whose preferences are likely to differ from 

preceding generations. Declining international student enrollment and rising tuition costs are also headwinds facing the 

sector. However, it is not all doom and gloom. Student housing has only recently started to mature as an asset class for 

investors. Despite the new reality the sector is facing, there is no reason to believe that the sector cannot once again 

reinvent itself and find new ways to adjust to a new generation and a new normal. 

Francisco Nicco-Annan

Economist

Multifamily Economics and Research

November 2019

Opinions, analyses, estimates, forecasts, and other views of Fannie Mae’s Multifamily Economics and Market Research 

Group (MRG) included in these materials should not be construed as indicating Fannie Mae’s business prospects or 

expected results, are based on a number of assumptions, and are subject to change without notice. How this information 

affects Fannie Mae will depend on many factors. Although the MRG bases its opinions, analyses, estimates, forecasts,

and other views on information it considers reliable, it does not guarantee that the information provided in these 

materials is accurate, current, or suitable for any particular purpose. Changes in the assumptions or the information 

underlying these views could produce materially different results. The analyses, opinions, estimates, forecasts, and 

other views published by the MRG represent the views of that group as of the date indicated and do not necessarily 

represent the views of Fannie Mae or its management.

0

2

4

6

8

10

12

% Change in Enrollment

3.6 5.4

-7

-15.5

-4.3

-20

-15

-10

-5

0

5

10

China India South

Korea

Saudi

Arabia

Canada

% Change in Enrollment