GLOBEST.COM — This year is shaping up to be the hottest on record for the popular build-to-rent sector, as consumers priced out of the homebuying market seek more privacy and space in secondary and suburban locations.
Single-family rental construction posted its strongest year ever last year with 6,740 new build-to-rent homes constructed, according to YardiMatrix data. But this year’s supply of new BFR homes is expected to more than double that record, with 14,000 planned to open their doors in 2022.
While BFR homes proliferated in the aftermath of the Great Financial Crisis, “this time it’s different,” RentCafe’s Alexandra Ciuntu says. “The pandemic created an unprecedented demand among renters for space and privacy, which houses can address much better than apartments.”
A recent RentCafe survey of 3,300 renters reveals that 78% are interested in living in SFR communities. Searches for homes for rent tripled in 2021 compared to the previous year, Ciuntu says.
“It’s easy to see the appeal of built-to-rent homes: the trend combines the financial and leasing flexibility of a rental with the amenities and convenience of a professionally managed property, all while living a single-family home lifestyle,” she says. “As a result, everyone is interested.”
SFR homes tend to be clustered in lower-density areas since they require significant amounts of land to develop; about 61% of all SFRs are in suburban locations. RentCafe’s survey results hewed closely to that trend, with 29% of respondents saying they would choose an SFR because they want more space and 25% saying they want more privacy.
Phoenix leads the way as the #1 metro for BFR homes, with a total of 6,420 homes in SFR communities, followed by Columbus, Dallas, Houston, and Riverside. The Phoenix metro area also leads the way in new apartment construction.
The two largest build-to-rent communities of SFRs are in Las Vegas.
Investors are taking note, with multiple players launching capital funds with the build-to-rent strategy in mind. In October, PEG Companies (PEG), a vertically integrated commercial real estate investment firm, launched PEG Capital Partners Fund IV, L.P., which is targeting $200 million in equity to focus on the development and management of luxury BFR communities in the primary markets of Utah, Idaho, Arizona, and Colorado.
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