For some time now, we’ve been screaming it from the rooftops: the build-to-rent concept is the
future of the development industry. Whether because the costs of buying a home are prohibitive
or because the flexibility is appealing in an increasingly mobile society, a large segment of the
population continues to choose renting over buying for the long term. As a result, we’ve
witnessed a craving among investors for an option that feels more specialized on the concept.
Enter, build-to-rent communities, where maintaining property values is a collective goal and
single-family homes reign.
That latter aspect is key, and a new article by Kelsi Maree Borland for premier real estate content
site GlobeSt.com does a great job of explaining why. It cites info from a Walker & Dunlop-
hosted webinar, in which Dennis McGill, director of research at Zelman & Associates, spoke on
the fundamentals of the BTR market.
The Takeaways
From 2017 to 2019, the blended rent growth of BTR properties averaged 4.1%. During the same
time frame, multi-family properties saw only 3.2% rent growth. Then, the pandemic hit. The
result has been a 6.3% increase of rents in build-to-rent communities. Meanwhile multi-family
blended rent rates are 2% lower.
What Does This Tell Us?
It showcases that more people are seeking single-family properties, but they’re intent on renting.
This means that the demand for houses to rent is higher than ever—your average few in the
typical suburban neighborhood aren’t cutting it.
And McGill shared another notable piece of information: “There is $75 billion of institutional
capital for build-to-rent projects, and the vast majority was announced in the last 12 months. It is
seemingly growing by the day.”
As experts in the industry ourselves, we couldn’t agree more with this analysis.
If you’re interested in learning about our perspective on build-to-rent concepts, give our home
page a scroll.
