RangeWater Featured in the July Issue of NAA Units Magazine

By Michael Miller | Contributor, NAA Units

Build-to-rent is established in the rental housing industry, but it’s still gaining its footing.

Build-to-rent (BTR) is having more than its 15 minutes of fame. The newer form of building and operating rental housing blends traditional multifamily methodology and single-family living. Typically offering residents more space—among other features—BTR has burst on the scene in recent years, allowing residents to experience something a bit different than a traditional garden-style or high-rise property.

Many companies that were not in the realm before, joined the sector swiftly to gain a foothold. Communities have popped up across the country, mainly in warmer-weather climates in and around the Sun Belt, and they continue to expand in size and unit count.

Attractiveness

According to RentCafe, there was a record of nearly 27,500 BTR homes completed in 2023, a 75% increase compared to 2022 and triple the data from 2021. There are now more than 45,400 BTR homes under construction. Pre-pandemic years (2016-19) hovered around the 6,500-home mark
per year.

The top three metros—Phoenix, Dallas and Atlanta—accounted for almost one-third of BTR homes added in 2023. The ability to build out rather than up like in many urban areas is among the reasons for the rapid expansion in the Valley of the Sun. Phoenix and Atlanta joined 12 other markets in the top 20, reaching a 10-year high in BTR completions. Columbus and Akron, Ohio, Indianapolis and Salt Lake City were among the markets in the top 20 outside the Sun Belt. At the state level, Texas had the most completions with 4,800 units, followed by Arizona at 4,000 and Florida with 2,800 units.

Phoenix, Dallas and Atlanta also led the way for most deliveries in the past five years with a combined 19,400 BTR homes, or about 30% of the 68,000 total. Phoenix is home to the most BTR homes under construction with nearly 7,300. Dallas and Houston followed with 6,500 and 4,800 homes, respectively. Huntsville, Ala., Charlotte, N.C., and Atlanta each had between 2,300-2,500 units under construction.

Meanwhile, Apartment List reports two-thirds of the housing stock in the U.S. is single-family homes, and 16.6% are rented. Citing the Census Bureau, there were 85,000 BTR single-family homes that started construction in 2023, which was a record 9% of all single-family starts. Unit size and family size are also larger in single-family rentals (SFRs)—2.8 bedrooms versus 1.6 bedrooms and 2.9 people versus two people. The 13% higher rental price on SFRs is offset with a 26% higher household income for single-family renters.

According to a trends insights report from Cushman & Wakefield, single-family rentals are outperforming traditionalmultifamily. “According to CoreLogic’s Single-Family Rent Index, rents are up by 3.4% over last April, the highest rate of growth since last spring. Contrast that with the overall multifamily rent growth of 1.5% year-over-year (YOY) in the first quarter, and it’s clear that fundamentals within single-family rentals are holding up better than traditional multifamily apartments.” CoreLogic also reports attached SFRs rents posted their first YOY decline (-0.6%) in 14 years compared to the nearly 3% YOY jump in February.

“Rising sale prices, large down payments and high interest rates are making homeownership more difficult for the average American,” says Patrick Burke, Senior Managing Director, Property Management with RangeWater Real Estate. “As a result, BTR communities are increasing in popularity with some of the characteristics of single-family homes typically not available in multifamily properties.”  While still in the rental housing industry, BTR units are different—whether that’s in layout and design, management style or amenities offered—but resident experiences are still top of mind for rental housing professionals. Instead of offering a bark park, operators of BTR have the ability to fence-in backyards at individual homes, for example, or provide garages at homes versus carports, a parking garage or other designated parking area. 

Read the full article in NAA Units here.