Student housing investors are increasingly concentrating capital around large universities with growing enrollments, a strategy industry executives say reflects expectations that demographic pressures will favor a smaller group of campuses.
The approach was evident in a deal announced last week in which Chicago-based Scion Group and Ares Real Estate bought four properties serving the University of Georgia, the University of Tennessee and Texas State University for about $435 million. All are large public universities that have expanded enrollment in recent years, making them the type of institution many student housing investors favor as demographic headwinds reshape higher education.
The purchase comes as investment activity rebounds across the sector. U.S. student housing deal volume totaled about $6.3 billion over the past year, according to CoStar. Industry executives say a growing share of that capital is targeting universities with stronger enrollment outlooks and housing fundamentals.
The divide isn't just showing up in investment sales. It's visible on the campuses themselves.
At California State University, Long Beach, hundreds of freshmen began the fall semester in a hotel, riding shuttle buses to campus while workers finished a delayed 424-bed residence hall.
Nearly 2,000 miles away, the University of Wisconsin-Oshkosh is demolishing three residence halls it no longer needs.
The contrasting scenes illustrate the same trend driving student housing capital flows: Growing universities are racing to accommodate more students, while enrollment declines elsewhere are leaving institutions with surplus dormitories.
“Investors are no longer betting on higher education in general,” Justin Glasgow, managing director and national director of Northmarq Student Housing, told CoStar News. “They’re betting on specific universities.”
Top-tier schools
Campus selection has always mattered in student housing investments. What has changed is the potential cost of getting it wrong.
The number of new U.S. high school graduates peaked at roughly 3.9 million in 2025 and is projected to decline 13% to about 3.4 million by 2041, according to the Western Interstate Commission for Higher Education, or WICHE. The group attributes the contraction primarily to the decline in births surrounding the Great Recession, when many of the students expected to enter college over the next decade were born.
The geographic imbalance is one reason investors say they are gravitating toward Southern universities. WICHE projects that 38 states will have fewer high school graduates in 2041 than they did in 2023, with the Midwest and Northeast facing some of the greatest pressure, while the South is expected to fare better than the nation overall.
'Investors are no longer betting on higher education in general. They're betting on specific universities.'
Fewer high school graduates do not automatically translate into an equivalent decline in college enrollment. Universities can offset some of the loss by recruiting more aggressively, increasing enrollment rates and attracting international, transfer and adult students. But institutions with limited geographic reach or weakening finances may have fewer ways to compensate, Glasgow said.
Glasgow said investors expect the remaining traditional-age students to become increasingly concentrated at flagship public universities, nationally recognized institutions and other schools capable of recruiting beyond their immediate regions. That expectation helps explain why capital is flowing to growing universities in Southern states even as institutions elsewhere consolidate campuses and shed residence halls, according to Glasgow.
That thinking is also reshaping development. The 68 universities in the Power 4 athletic conferences account for 82% of student housing beds scheduled for completion in 2025 and 2026, according to real estate services firm JLL.
“Student housing has returned to being a fundamentals-driven business,” Will Baker, a senior managing director at Walker & Dunlop, said in July.
Those fundamentals extend beyond enrollment and university prestige to include housing availability, barriers to development and the number of competing beds already under construction. Even a growing, nationally recognized university can become a difficult housing market if developers add supply faster than student demand increases, Baker said.
'Student housing has returned to being a fundamentals-driven business.'
Walker & Dunlop’s 2026 student housing outlook identified Missouri, Penn State, Alabama, Auburn, Texas and Oklahoma among the sector’s “haves,” where enrollment growth and restrained construction have supported occupancy and rents.
Texas A&M, Florida State, Central Florida, Arizona State, North Carolina State and Michigan landed in a separate category facing heavier development pipelines.
Baker said the distinction shows why investors are selecting housing markets rather than simply compiling a list of prestigious universities. Under that framework, a university can continue gaining students while its surrounding housing market becomes temporarily overbuilt.
Capital concentrates
National averages have yet to show a broad downturn, though rent growth has largely disappeared.
Average U.S. student housing asking rents reached $938 per bed in the third quarter to date, essentially unchanged from a year earlier, according to CoStar data. Effective rents slipped to $925 from $928 per bed, a sharp moderation from the sector’s rent-growth peak several years ago.
Those national figures mask significant differences among university markets, according to industry experts, with some campuses facing housing shortages while others contend with enrollment declines or heavy new supply.
CoStar data shows investment activity has recovered from its recent low. U.S. student housing transaction volume totaled $6.3 billion in the past year, up about 40% from the market's trough in 2023 and in line with 2024.
The overall total does not reveal which campuses are attracting buyers. That selectivity is more apparent in where some of the sector’s largest investors are deploying their money.
That selectivity increasingly mirrors the way lenders evaluate university markets, according to Zachary Streit, founder and president of Priority Capital Advisory, a Los Angeles-based debt and equity advisory firm; Streit has placed more than $5 billion in capital over his career.
"The schools still pulling in student housing capital in 2036 will be the ones lenders already treat like investment-grade credit: a flagship or Power Four brand, applications growing faster than enrollment so the school stays selective, a structural bed shortage on campus and a state that funds it," Streit told CoStar News. "Capital follows financeability. When a lender can underwrite 10 years of enrollment stability, they'll lend aggressively, and cheap debt is what makes these deals pencil."
Scion and Ares have invested more than $1.3 billion this year in two portfolios serving a carefully selected group of university markets. In addition to the $435 million purchase from developer Schenk, the partnership acquired 12 properties containing 7,578 beds for approximately $910 million in May.
When the partnership was formed, the companies said they would focus on high-quality properties in markets with strong enrollment fundamentals and limited new supply.
“This sector continues to demonstrate resilient demand characteristics, and we are pleased to expand our platform alongside Ares,” Scion Chief Executive Robert Bronstein said at the time.
Development follows demand
Southern California illustrates the opportunity created when enrollment and housing supply diverge. According to CoStar data, UCLA and USC enroll nearly 87,000 full-time students but together provide only about 29,200 university-owned beds.
CoStar data shows UCLA is pursuing a proposed $351 million residence hall at 901 Levering Ave. that would add approximately 1,130 undergraduate beds. A private housing investor also recently acquired 1775 Beloit Ave. with plans to reposition the multifamily property for students.
“The imbalance between UCLA’s growing student population and the limited housing available near campus creates a durable need for additional capacity,” Colliers Vice Chair Kitty Wallace said in a statement about the Beloit Avenue acquisition.
Across town near USC, Landmark Properties opened The Standard at Los Angeles, a 1,261-bed development that ranks among the largest purpose-built student housing projects completed in the city in recent years.
Investors are also looking beyond the best-known flagships when enrollment growth and limited construction align. Landmark Properties and Paceline Equity Partners have begun developing The Standard at Kennesaw, a five-story, 656-bed complex less than a mile from Georgia's Kennesaw State University that is scheduled to open for the 2028-29 academic year. The 157-unit project will include apartments ranging from studios to six bedrooms and more than 11,000 square feet of amenities.
“Kennesaw State’s record enrollment, paired with nearly five years without new purpose-built supply, has created a meaningful imbalance in the market,” Paceline Chief Investment Officer Leigh Sansone said in the development announcement.
Dorms lose purpose
The same demographic forces attracting towers and nine-figure investments to growing universities are producing a markedly different real estate problem at institutions losing students.
The University of Wisconsin-Oshkosh is demolishing three residence halls after years of enrollment declines allowed it to consolidate students into its remaining dorms.
Other colleges are disappearing altogether. Pennsylvania's Cabrini University closed in 2024 before Villanova University acquired its campus and converted former residence halls into housing for approximately 900 students.
Trinity Christian College in Illinois announced in November 2025 that it would close at the end of the 2025-26 academic year. Limestone University in South Carolina ceased operations following the spring 2025 semester.
In Southern California, Azusa Pacific University sold a dormitory complex in the San Gabriel Valley for $91 million after enrollment declines reduced its need for student housing.
The differing outcomes highlight how student housing professionals say university-specific enrollment trends are increasingly shaping the value and future use of residence halls.
Examples from Georgia, UCLA, Wisconsin-Oshkosh and Azusa Pacific illustrate what student housing professionals describe as an increasingly bifurcated landscape, with growing universities attracting investment while some schools facing enrollment declines are reevaluating the future of aging residence halls.
The universities targeted by Scion and Ares in last week's purchase — Georgia, Tennessee and Texas State — represent the campuses some investors say will continue drawing both students and capital as the national college population contracts.
“The list of schools people are willing to make long-term bets on is getting shorter,” Glasgow said.