GMI was awarded the £22m contract by York-based S Harrison Developments, which secured planning consent in 2022.
Start of construction follows a forward funding deal between the developer and Singapore-based Q Investment Partners (QIP).
Completion is expected in spring 2025.
The four-storey building, close to both the University of York and York St John University, will have 108 single studio rooms and 195 cluster bedrooms with shared living and dining rooms. It is designed by CSP Architects of York.
The ground floor amenity space comprises a cinema, shared working space, gym, laundry room and reception/common room area. External works include parking spaces and a cycle store.
The site was previously home to an accident repair centre operated by Alton Cars, which has since moved to larger premises at The Airfield Industrial Estate in Elvington.
Once completed, the development will be operated by the Prestige Student Living brand of Homes for Students, with the first students expected to move in for the start of the 2025 academic year.
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