Rewind to a decade ago and major REITs would have quickly dismissed student housing as a small niche market with minimal investment potential. The concept of purpose built student housing was almost exclusive to on-campus housing; aside from a few early adopters who helped usher in a new era of student focused accommodations. Outside of on-campus housing, students would by and large rent properties from independent landlords or local apartments. However, in 2015, the student housing sector has seemingly outgrown its status as a small niche market.

A niche market is typically characterized as serving a very specific need to a relatively small market segment. While student housing can still technically be considered a niche market, the size of the market has grown to a point where it’s drifting from this characterization.

This holds particularly true in the United States, where in 2014 alone, nearly 60,000 new private student housing beds were delivered to the market. The Canadian market, on the other hand, has seen slower growth; but it too is developing quickly. Rock Advisors stated that in 2013, there were over 950,000 full-time students enrolled at the 82 largest university campuses in Canada and 55% of these students attend universities outside of the communities they grew up in. Rock Advisors go on to say that there are over half a million students in need of places to live. This number will continue to increase, and as it does, the Canadian student housing sector will inevitably follow a similar path to its American counterpart.

One of the key indicators that the Canadian student housing market is on track to outgrow its niche status is the fact that major investors are starting to make serious moves in the industry. Consider the fact that earlier in 2015, CHC Student Housing attempted to gain first mover advantage as it aimed to raise nearly $100 million from the sale of common shares to expand their student housing portfolio. CHC didn’t end up getting the terms it wanted, and later pulled equity financing, but this is a clear indication that the student housing market in Canada is at the very least, attracting major investment attention.

Another trend that is starting to take shape in Canada and further pushing the student housing market out of its niche status is the emergence of public-private partnerships. We previously discussed what a public-private partnership is and how it’s starting to spill over from the American student housing market into Canada. Two major student housing companies, Canadian Campus Communities and Campus Living Centres, are leading this charge. These public-private partnerships demonstrate that there is not only a pressing need for purpose-built student housing in Canada, but also that there is major investment potential both on and off-campus.

Let’s return back to the original question – is student housing still a niche market? The answer isn’t a definitive yes or no; however, one thing can be said with certainty – the student housing market in Canada is no longer a small niche market. With an estimated 500,000+ student tenants (full-time students), this market segment is now a major part of the broader Canadian renter’s market. Furthermore, with enrolment rates consistently rising, it’s fair to assume that this market segment will continue to grow for many years to come.