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At my alma mater, we had dorms for the freshman to live in and the upperclassmen lived in campus apartments. We did not have greek housing for any chapters (we used to have a few fraternity houses, but due to liability issues, the campus got rid of them. Now some of the fraternities have off-campus houses that are not official, but where the fraternities hold theme parties and a few members live in the houses).
What usually happened is that a sorority or a fraternity tried to occupy a row of apartments on a level of one of the apartment buildings. My junior year, we had a real "Sigma Row" where there were 10 apartments completely occupied by Tri-Sigma members. Our chapter meetings still occurred in classrooms and conference rooms. Some years, we had a row of apartments that was completely greek, but not occupied by one chapter.
Benefits to this style of living? We weren't forced to necessarily live with sisters. Many sisters were involved in so many other things on campus (sports, theatre, music, etc) that they chose to live with people that they shared degree programs or activities with. Often they even lived with other greeks (not co-ed). My senior year, I lived with my little, the chapter president of Zeta Phi Beta at my school, and a non-affiliated out lesbian. It allowed me to see greek life from different angles. I learned to appreciate other chapters on campus because they were often my neighbors or roommates.
Now when it comes to chapter operations, what we did have is a house owned by the university and leased to the sororities free of charge. In this house, each room was owned by a chapter where they held all of their ritual objects and information. The rooms were pad-locked and only the presidents of each chapter had the key to their room. The rooms were definitely decorated on the outside and within so it was clear who owned each room. It was also important to make sure that ritual stuff was not in the hands of collegiate members and held in their apartments in case of theft.
While a sorority house would be nice, it can also be busy and distracting to members. Remember, recruitment events typically happen in the houses and members are always dropping by. It also makes your house a target for campus tom-foolery. Some members may prefer to live this way, but if you are very independent or are very focused on studying, it may not be ideal. However, I do wish we did have a house so we could have a dedicated chapter room and a place that would always be "home" even if I didn't live there that semester/year.
There are positives and negatives to both situations. You need to evaluate what would be best for you. Some chapters require that you live in the house, so that may affect what you ultimately decide to do. It is up to you to make the best out of either situation.
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