As we look towards the future of real estate, we believe demographic shifts present a wealth of opportunities for growth and investment. The aging U.S. population across generational cohorts is driving demand across various sectors of the real estate market. These trends may offer unique opportunities to capitalize on emerging demands and secure long-term performance in a dynamic landscape.
The United States is experiencing significant demographic changes, with notable increases in Baby Boomer, Gen X, and Millennial generations. As the U.S. population continues to age, so will the demand for housing options tailored to the needs of older generations. Simultaneously, urbanization and lifestyle changes are fueling the need for housing solutions that cater to young, mobile populations.
Alternative real estate sectors such as student housing are particularly well-positioned to benefit from these demographic trends. Student housing demand is driven largely by college enrollment, a regular life event, rather than economic fluctuations. We believe this makes it a resilient strategy even in the face of broader economic uncertainties.
The decline in new construction projects within the student housing sector presents an opportunity for meaningful rent growth. As enrollment rates steadily increase,1 the demand for student housing is expected to outpace the supply of new projects, creating favorable market conditions. As the chart below illustrates, the decrease in new student housing construction underscores the potential for rent increases as demand continues to rise, a dynamic that may offer the potential for strong returns.
By understanding and adapting to demographic trends, it may be possible to leverage opportunities in the real estate market that are reshaping demand. Alternative sectors such as student housing are well-suited to benefit from changing demographics, offering potential for attractive returns and long-term growth. As the real estate landscape evolves, selecting sectors that align with demographic shifts may be the key to a successful commercial real estate strategy.
To learn more about the evolving real estate landscape, read our 2024 Mid-Year Outlook report here.
1 National Center for Education Statistics. Undergraduate Enrollment. May 2023.
2 Real Page Market Analytics, retrieved from website 7/11/24.