What Role Do Apartments Play in Off-Campus Student Housing Demand?
A sizeable share of collegiate Millennials lives in off-campus rental accommodations, with apartment buildings dominating this segment.
Size of Student Housing Demand
Housing choice is a critical decision facing young students. While on-campus accommodations provide convenience and safety, off-campus living offers a variety of local experiences and budget flexibility.
In this thematic series on student demand, we begin with the overall size of this segment and its distribution over accommodation types.
As of 2016, nearly 21 million of the nation’s 71 million Millennials1, or a 30% share, were enrolled in programs working toward degrees.
As shown below, while about 13% of those enrolled in school lived in formal student housing (group quarters), a whopping 87% lived in off-campus housing accommodations2.
Source: Chandan Economics, American Community Survey (ACS), 2016
Interestingly, nearly 46% of Millennials in school lived in owner-occupied units, lending credence to the recent trend of the cohort living with their parents, while another 40% lived in rental properties.
Off-Campus Apartments Play a Major Role
A closer look at the off-campus rental accommodation choices of Millennials shows the significant role apartment properties play in catering to this demand segment.
As depicted below, close to 45% of Millennials in school lived in off-campus apartment properties, with small asset multifamily alone comprising 34% of the overall student demand and large buildings capturing the remaining 11% share.
Source: Chandan Economics, American Community Survey (ACS), 2016
Single-family rentals formed an impressive 37% share of the overall student renter population, again supporting the narrative of lower household formation rates among Millennials as they, on the margin, remain with their families more frequently.
In a follow-up blog, we will examine the living arrangement choice of student Millennials across three major modes, including living with family, living alone and rental sharing.
For small asset operators, while off-campus student demand represents a stable growth opportunity, competing against larger, amenity-rich buildings may require strategic investment in upgrading and facilitating user convenience, including options for high-speed connectivity, one-card access, common rooms, and possibly bespoke partnerships with local service providers to enrich student experience.
1Millennials are defined as 18 years or over in 2016, born in 1982 or later.
2Unless otherwise stated, all data is sourced from the 2016 American Community Survey.