90K Build-to-Rents Are Under Construction Nationwide

Build-to-rent (BTR) housing is rapidly expanding, with 90K units under construction across the country.

Jordan B. & Han-Gwon Lung
December 12, 2024

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Good morning. Build-to-rent (BTR) housing is rapidly expanding, with 90K units under construction nationwide, mostly concentrated in the US South and West regions.

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Market Snapshot

S&P 500

GSPC

6,084.19

Pct Chg:
0.82%

FTSE NAREIT

FNER

804.66

Pct Chg:
-0.34%

10Y Treasury

TNX

4.30%

Pct Chg:
+0.029

SOFR

30-DAY AVERAGE

4.608

Pct Chg:
0.0%

*Data as of 12/11/2024 market close.

IN THE PIPE

90K Build-to-Rent Units Are Under Construction Across The US

Build-to-rent (BTR) housing is rapidly expanding, with 90K units under construction nationwide, mostly concentrated in the US South and West.

Zooming out: BTR housing, which offers single-family-style living with community amenities, has become increasingly popular among renters due to high mortgage rates and limited housing inventory for aspiring homebuyers. Currently, Texas, Florida, Arizona, Georgia, and North Carolina are among the states driving significant BTR construction.

90K Build-to-Rent Units Are Under Construction Across The US

Region by region: The South (specifically the Sun Belt) leads with 57K units under construction, expected to be completed by 2Q27. Key states include Texas, Florida, and Georgia. The West comes next with 23.1K units by 1Q27, mostly in Arizona. The Midwest rounds out the top 3, with nearly 8K units expected through late 2027. Meanwhile, the Northeast trails with only 1.8K units expected over 21 months.

➥ THE TAKEAWAY

The bigger picture: High mortgage rates and economic uncertainty will sustain demand for BTRs, delivering single-family living without ownership. For homebuilders, SFRs provide a safety net to reduce risk, increase housing supply, and stay focused on for-sale homes, even in tough markets.

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✍️ Editor’s Picks

Explore Neutral’s Strategy: Neutral is rethinking sustainable construction by integrating mass timber, a unique investor model, and an iterative approach to scale sustainable development. (sponsored)
REIT resilience: Public REITs rose 14% YoY, outpacing private real estate by 17%, driven by strong balance sheets and a flexible response to interest rate changes.
Activist pressure: Healthcare Realty Trust (HR) faces big changes after activist investor Starboard Value took a 5.9% stake, leading to new board appointments and a CEO search after the merger.
Zoning clash: Tampa City attorney Andrea Zelman is accused of threatening to suspend zoning reviews after a court ruling challenged the city's authority, raising concerns among developers.
Shutdown looms: With a 12/20 deadline approaching, Congress remains at an impasse over the budget, risking a government shutdown that could disrupt key economic and CRE functions.
Legal battle: Red Oak Realty is suing Vanguard Properties for allegedly using confidential info from failed merger talks to "poach" agents, seeking damages and a court injunction.

🏘️ MULTIFAMILY

Mobile moves: Brookfield (BN) secured $1.6B from selling nearly 80 US mobile home parks, reflecting rising investor demand for affordable manufactured housing.
Loan secured: Madison Realty Capital and Unity Capital have provided $214M in financing for a $250M oceanfront condo project in Long Branch, NJ.
Redeveloped mall: Verde Investments received approval to transform the former Fiesta Mall in Mesa into an urban village featuring up to 4K homes and 1.85 MSF of retail and office space.
Big apartment sale: The Preserve at Melrose, a prominent multifamily property in San Diego, sold as part of a surge in Q4 multifamily deals, surpassing $772M in the area.

🏭 Industrial

Bigger footprint: Elion Partners bought 4 warehouses in Sunrise, FL, from Blackstone’s(BX) Link Logistics for $206M, with the largest property selling for $102.6M.
Land grab: Amazon (AMZN) purchased 200 acres in Hesperia, CA, for $161.9M to build a 2.5 MSF warehouse, with construction already underway.
Full of data: Prologis (PLD) and Skybox Datacenters have sold a converted Illinois warehouse to HMC Capital, now a high-capacity, 32 MW data center.

🏬 RETAIL

Merger blocked: A federal judge has blocked the $24.6B merger between Kroger (KR) and Albertsons (ACI), citing antitrust concerns and market concentration issues.
Name brand selloff: A portfolio of 120 JCPenney stores, totaling 16 MSF across 34 states, is set to be sold in 2024, with potential sales topping $1.3B.
Slowing down a bit: Starbucks (SBUX) plans to reduce the number of new store openings in 2025 amid a redesign strategy and broader corporate changes.

🏢 OFFICE

A big deal: Cousins Properties' $521.8M purchase of Austin's Sail Tower, fully leased to Google, marks the city's largest office deal of 2024 amid high vacancy rates and shifting market dynamics.
From distress to deal: LA County has completed its $200M purchase of the 54-story Gas Company Tower, marking the end of a long, convoluted saga.
Healthcare pivot: The Kelemen Company is converting a third (115 KSF) of The Atrium office tower into healthcare facilities near John Wayne Airport.

🏨 HOSPITALITY

Leisure rebound: Lodging Analytics Research & Consulting (LARC) expects that softer economics, more foreign arrivals, and a stronger-than-expected US economy will boost hotel performance.

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*Please see the advertising disclosure at the bottom of this newsletter.

📈 CHART OF THE DAY

From 2019–2023, securitized multifamily properties saw a 15.77% NOI per unit growth, with operating expenses rising slightly faster than revenue, signaling overall revenue gains.