Walker & Dunlop: Student Housing Sector Strong

(Image courtesy of Armin Rimoldi/pexels.com)

Walker & Dunlop, Bethesda, Md., released its 2026 Student Housing Outlook, finding that the sector is primed for a new investment cycle.

“Student housing has returned to being a fundamentals-driven business,” said Will Baker, senior managing director of Capital Markets Real Estate Finance at Walker & Dunlop. “While overall sector fundamentals remain strong, investors are placing greater emphasis on universities with favorable demographics, and barriers to new development, rather than pursuing broad national strategies.”

National preleasing reached 71.6% in April, up 2% year-over-year, and there was a healthy 1.8% increase year-over-year in fall 2025 enrollment. Markets off to a strong start as of April include Virginia Tech, at 88.2% preleased, Missouri, at 84.1%, Auburn, at 77.9%, and Illinois, at 77.5%.

Average rent per bed was $915 for academic year 2026-2027, down 0.2% year-over-year. Leasing-season rent growth has averaged just 0.2% since 2025, compared with significant increases in 2022-2024. But, any recent slowdown in rent growth is independent from demand, Walker & Dunlop noted–it’s tied to a stronger supply.

Deliveries totaled approximately 100,800 beds against demand of 146,300, an absorption ratio of 1.45x.

Some of the fastest-growing markets include Northern Arizona, the University of Cincinnati and the University of Iowa.

In terms of capital markets, outperforming assets have some features in common. They tend to be supply-constrained flagship universities, have strong and growing enrollment, are seeing pre-leasing ahead of the prior year, have positive or at least promising rent growth, an attractive value relative to replacement cost and annual lease resets.

Investor demand has been strong, with national student housing transaction volume at 8.8% billion, a 48% increase from 2023.