The Commercial Real Estate Alpha Site

By Jay Parsons via LinkedIn

Here are the top 15 markets for ongoing construction of build-to-rent single-family housing units, according to John Burns Research and Consulting. Few thoughts:

1) Top BTR construction markets are generally also top apartment construction markets. So if you look at a market like Phoenix (arguably the birthplace of BTR at scale) with nearly 10k BTR units under way, you’d also want to consider the 50k apartment units under way. This is one that still has solid demand tailwinds, but could be a real grind over the next year or two given the sheer volume of supply — especially in the western suburbs.

In most of these markets, BTR construction levels amount to around 10% of apartment construction totals. Phoenix is at the high end at 19%, while Nashville and Denver are lower at 5%.

2) BTR construction is very concentrated in a small number of markets. In fact, these 15 markets are home to nearly two-thirds of all active BTR construction nationally. Compare that to apartments, where the top 15 markets comprise just over half of all construction. At least 95 U.S. metro areas do have at least one BTR project under way, according to JBREC. But in most spots, the number of projects are very few.

3) Generally speaking, BTR is feeling the same supply-induced pains as apartments right now — so that’s compressed rent growth to 1.7%, according to JBREC, a shade higher than multifamily’s 0.6%. That plus higher rates and tighter construction financing translate to BTR seeing similar slowdown in starts of late.

But longer term, is there any doubt we’re still in the early innings of BTR? Little of this product even existed prior to a decade ago, so not much of it is even out there. And it fits a great niche for those who’ve graduated past the apartment stage of life (more likely to have kids, more likely young adults in their early 40s) but aren’t yet ready or willing to buy a home for whatever reason … yet still enjoy the convenience of living in a managed rental community.

#BTR #housing #rentalhousing CLICK HERE for full article and others from Jay

There is one of our markets (#12 Sarasota) on the list.