Single-Family Build-to-Rent Properties Expanding in a Number of Markets

Capital is being put to work, with developers acquiring land sites and accelerating the pace of construction starts

inbusinessPHX.com

Northmarq, a capital markets leader, released its Single-Family Build-to-Rent Properties report. The special report highlights how the market continues to gain momentum, with the pace of deliveries and construction starts accelerating, and operating performance at existing properties strengthening.

More capital is flowing into single-family build-to-rent properties. During the second half of last year, several institutions announced plans and partnerships to move into the single-family build-to-rent space or expand into additional markets. Capital is being put to work, with developers acquiring land sites and accelerating the pace of construction starts. In addition, debt continues to be available for acquisitions of existing communities and the financing of development projects.

Developers have been ramping up the pace of construction starts of single-family build-to-rent communities in response to demand growth. The rise in single-family build-to-rent starts, up 20% in 2021 to nearly 60,000 units, outpaced the rate of starts in the overall single-family for-sale market.

“While development activity for single-family rentals gained momentum at the national level, builders are showing a clear preference for certain regions in the country, while holding off on construction in more mature but lower-growth local economies,” said Trevor Koskovich, Northmarq’s President-Investment Sales.

Key Phoenix highlights from the special report:

  • Rising for-sale housing prices continue to make it increasingly difficult to transition from renting to owning, creating additional support for the single-family build-to-rent (SF BTR) market. Some of the most significant price increases have taking place in markets where SF BTR construction is most active, such as Phoenix.
  • Delivery activity peaked from 2018-2020, with the Phoenix area being one to the first markets to truly adopt the single-family BTR model.

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