More than 66,000 Build-to-Rent Units Underway in Sun Belt
As the landscape of build-to-rent (BTR) units across the U.S. becomes denser and more concentrated as developers realize more opportunity, the South region remains ground zero for the rental sector.
As of early November, some 113,308 BTR units were under construction (including at properties in lease-up where construction is ongoing), according to RealPage Market Analytics. As was the case in September, the Sun Belt remains a clear leader with roughly 66,500 units under construction in the South (about 41%) and another 29,800 units under construction across the West (about 26%). Meanwhile, comparative laggards of the Midwest (14,484 units or nearly 13%) and Northeast (2,441 units or 2%) make up less than one quarter the total number of BTR units under construction.
The macroeconomic environment is certainly keeping BTRs attractive for many renters. Although home prices have come down in some regions, they remain significantly above pre-pandemic prices. And, coupled with high interest rates impacting mortgage loans, this creates a rich pool of would-be homeowners desiring a more single-family home-like residence, but not necessarily ready to buy.
Outside of private or individual developers, RealPage is tracking more than 300 developers with build-to-rent properties under construction. Among that group, some 15 developers have more than 1,000 units in varying degrees of construction. Five developers have more than 2,000 units underway.
In the #1 spot with 3,115 units under construction is Scottsdale, AZ-based Cavan Cos. building primarily in the South. Ohio-based Redwood Living Inc. which constructs neighborhoods in the Midwest and South has some 2,917 units under construction to claim the #2 spot on the list. Scottsdale-based Taylor Morrison (2,578 units across the South) claims in the #3 spot on the list of top developers. Another Scottsdale group, The Empire Group has nearly 2,500 BTR units underway across the Southwest. Phoenix-based NexMetro Communities rounds out the list in the #5 spot with 2,330 units under construction across the South and West.
Just outside the top 5, Wisconsin-based Continental Properties Company Inc., North Texas-based American Homes 4 Rent and Houston-based Wan Bridge Group each have over 1,500 units underway.
While the BTR terrain offers a lot of variety and options (there’s no one set style or unit size) for the American renter, its relative newness in the multifamily landscape leaves some mystery as to what the future holds for this space. RealPage continues to track almost 14,000 planned BTR units. (Planned refers to the construction stage after a permit has been pulled but construction is not actively underway.) Though, it’s worth noting that not all of those projects will reach completion as lending, sourcing materials and labor issues continue to impact real estate development of all kinds.