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Southern Comforts Luring Built-To-Rent Developers

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Updated Apr 29, 2024, 02:50pm EDT

How significant a force is the build-to-rent (BTR) single-family home phenomenon? Consider this. The National Association of Home Builders estimates approximately 10% of the nation’s new housing construction is destined to be offered as BTR product.

Nowhere is the BTR movement more evident than in the Sunbelt. The Southern states are the epicenter of BTR construction, underscored a few months ago in a RealPage Analytics Blog. Blog author Carissa Brown reported 113,308 BTR units were being built in early November 2023, of which approximately 66,500 units, or 41%, were being built in the South. Those numbers easily topped the Western U.S. with 29,800 units (29%) under construction; the Midwest 14,484 units (13%) and Northeast 2,441 units (2%).

Factors driving the growth of BTR have been discussed at length, among them the high cost of single-family houses, the elevation in interest and mortgage rates and the lack of savings among populations beginning family formation.

Beyond these catalysts, population migration patterns favor the South, with growing in-migration into Southern states having begun decades before the pandemic accelerated its occurrence. The trifecta of more affordable housing, abundant and growing numbers of job opportunities and warmer, sunnier climes are difficult inducements for many people to ignore.

Adding to the South’s outperformance is the preference among many for less-dense communities and access to space for outdoor activities and amenities.

It should hardly come as a surprise, then, that when the 9th annual Build-to-Rent Forum (East) was held in March, it was staged in a capital of the New South, Nashville, Tenn.

Major participants

Investment by many of the key players tend to have a Southern feel. Atlanta-based multifamily real estate company RangeWater Real Estate with more than $6.62 billion in total capitalization across the Sunbelt and Mountain West was an early entry into the BTR space. “We are active across the Sunbelt, and see BTR – especially our focus on professionally managed communities of rental houses – as something the growing demographic in our region demands,” says Steven Shores, company chair and CEO.

RangeWater’s development team has launched construction on more than 1,030 BTR single-family and townhome units across seven projects within the past year, all bearing the company’s Storia brand imprimatur. The result has been a 228% surge in RangeWater’s owned BTR portfolio. Its conventional BTR and hybrid BTR/multifamily concepts have opened in recent years along the Atlanta BeltLine; in Lawrenceville, Ga.; in the San Jose neighborhood of Jacksonville, Fla.; in Bradenton, Fla.; Fort Worth, Austin and San Antonio, Texas; and in Charleston, S.C.

Sold on South

Speaking of South Carolina’s largest city, another major player is Charleston, S.C.-headquartered Greystar, which announced its entry into the BTR sector last year. The company’s dedicated BTR brand, Summerwell by Greystar, is expressly designed for people seeking a lifestyle going beyond apartments to single-family home communities.

These renters want the yards, garages and privacy paired with single-family lifestyles, but haven’t forgotten the amenities they may have enjoyed as apartment renters. For instance, among the amenities at Greystar’s Summerwell Sunterra community in the Houston suburb of Katy, Texas are a swimming pool, lazy river, tennis courts and a Crystal Lagoon. Additional Summerwell by Greystar properties in the Sunbelt include communities in Crandall, Texas; Apopka, Fla.; and Union City, Ga.

Meantime, Atlanta-headquartered Landmark Properties broke ground on its first build-to-rent developments last year. The long-time builder and manager of student assets, Landmark did not have to be sold on the South. Its new BTR efforts are The Everstead at Conroe, a 190-unit community in suburban Houston, Texas, and The Everstead at Madison, a 231-unit development in the Huntsville, Ala. area town of Madison, Ala.

About 18 months ago, J.P. Morgan Global Alternatives and BTR company Haven Realty Capital forged a joint venture to acquire or develop more than $1 billion in new BTR housing, beginning in metropolitan Atlanta.

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