Parkland Communities entered the build-to-rent space with Sweetwater Springs, a collection of rentable townhomes near Lawrenceville. After testing the waters, the company now has 900 more units in the pipeline.
By Tyler Wilkins – Reporter, Atlanta Business Chronicle
For much of his career, Jim Jacobi stuck to developing new residential subdivisions in metro Atlanta. A few years ago, he wanted to test the build-to-rent space.
Within 90 days, the 58-unit Sweetwater Springs community in Lawrenceville was completely pre-leased.
That’s when the president of Parkland Communities decided to incorporate this up-and-coming real estate opportunity into his firm’s strategy.
Parkland Communities plans to add a second 37-unit phase to Sweetwater Springs, for which more than 100 potential renters have joined a waiting list for a unit. In total, the firm has 900 build-to-rent units in the pipeline, including two additional projects in Gwinnett County.
Build-to-rent trend
Usually located in suburban areas, build-to-rent homes offer young professionals and empty nesters more space for their buck than they could find in many parts of in Intown Atlanta. Record home price appreciation, changing attitudes toward home ownership and the rise of apartment rents inside the urban core have buoyed the viability of these communities.
“If you’re going to live in your house for less than five years, it is less expensive to rent than it is to own,” Jacobi said. “There’s a lot of uncertainty in the housing market with prices and interest rates. [Renting a home] allows people the opportunity to avoid making a rushed decision.”
Metro Atlanta only had one month’s supply of for-sale homes on the market in March, according to data from First Multiple Listing Service. Real estate professionals consider a sellers’ market to exist when there is less than six months of supply. Since the beginning of 2021, the metro area has had less than 1.3 months of supply.
A backlog of constructing new homes — exacerbated by supply chain issues, rising construction costs and land values — has caused a seemingly steady stream of record home appreciation over the past few years. Prices in metro Atlanta grew 25.7% year-over-year in March, outpacing national appreciation, according to the latest S&P CoreLogic Case-Shiller Indices.
Sweetwater Springs offers two- and three-bedroom units between about 1,600-2,000 square feet. As of June, the average renter at the development paid $2,250 per month. That’s on par with the going rates for one-bedrooms in Buckhead or Midtown Atlanta.
The resurgence of amenitized town centers, such as in Norcross, Duluth and Lawrenceville, have enticed young professionals to reconsider suburban living. Compared with previous decades, suburban dwellers now have access to local restaurants, breweries and boutique shops, most of which once required a trip into Atlanta.
The rise of hybrid and remote work schedules allow office workers to push further out from the urban core without the worry of a stressful commute each morning and evening. Plus, growing job centers are spreading along the major highways running through North Fulton, Gwinnett and Cobb counties.
Changing perspective
Across metro Atlanta, local officials have balked at the concept of build-to-rent communities, soured by the rush of institutional investors purchasing and renting homes foreclosed in the Great Recession. The aversion also stems from a stigma that casts renters as unfavorable or transient, according to several real estate professionals in the build-to-rent space.
Jacobi argues that his homes will stay in better shape than the homes found in for-sale subdivisions. Developers often take a long-term investment strategy with build-to-rent communities, he said, incentivizing them to upkeep communities.
“You can go look at townhome communities that are 10 years old and look at build-to-rent communities that are 10 years old,” Jacobi said. “It’s a no-brainer – the build-to-rent is going to look so much better, [as a way] to protect the value of the asset.”
In Gwinnett County, here are two of the latest build-to-rent projects planned by Parkland Communities. Jacobi expects to deliver the first homes by the end of 2023:
- Sugarloaf Crest: A total of 67 stacked townhouses on Sugarloaf Parkway in the Lawrenceville area. Units will have two or three bedrooms.
- Rainwater Park: A total of 46 traditional townhouses on Cruse Road in the Lawrenceville area. Units will have three or four bedrooms.
