In the ever-evolving landscape of real estate, one sector that has boomed in recent years is the build-to-rent (BTR) model. As a design-build firm for residential developments focused on multifamily construction, we find Harrison Homes at the forefront of this movement. Industry professionals, institutional investors and consumers alike beg the question: Are build-to-rent developments a fleeting trend or do they represent a lasting shift in the way we approach housing?
Multifamily townhomes designed and built by Harrison Homes
Understanding Build-to-Rent Build-to-rent developments involve constructing residential properties with the specific intention of renting them out rather than selling individual units. Conversely, with traditional homebuilding, the primary goal is to sell units to individual homeowners. BTR, on the other hand, focuses on creating purpose-built townhome, single-family home or mixed-use rental communities that often come with shared amenities and services.
Refuting the Fad Notion
Changing Demographics: One of the key factors supporting the sustainability of build-to-rent developments is the changing demographics of potential tenants. Millennials and Generation Z exhibit a growing preference for flexibility and show less inclination towards long-term homeownership. BTR aligns with this trend, offering the freedom to live in desirable locations without the commitment of purchasing a home. Aging boomers who desire to age in place are also a rising group exploring rental properties that offer an alternative to senior housing facilities and/or the regular and costly home maintenance responsibilities that come with home ownership.
Economic Realities: Economic factors play a pivotal role in the popularity of build-to-rent. In an era where housing affordability is a pressing concern, BTR provides a alternative solution. It offers individuals and families quality housing without the substantial financial commitment of buying a home. With record high interest rates pricing would be buyers out of the market, renting townhomes or single-family homes is the next best option. Built for rent properties also may grant renters access to a community that would not have been affordable as a homeowner. This economic reality is likely to persist, making BTR a practical and enduring choice.
From the homebuilder’s and general contractor’s perspective, with the current high cost of capital, material and labor, building communities for rental can pose less risk and allow for the economies of scale when building multiple units vs. a single-family speculative build. Another factor is the ever-lengthening entitlement process with municipalities. When it takes a homebuilder double or triple the amount of time to obtain the necessary permits for residential construction, it makes developing single family infill less attractive.
Urbanization and Lifestyle Choices: As urbanization continues, the appeal of urban living remains strong. Attached build-to-rent developments often target prime urban locations, offering tenants the convenience of proximity to work, entertainment, and cultural amenities. The emphasis on creating vibrant, walkable communities aligns with contemporary lifestyle preferences, contributing to the sustained interest in BTR.
Investor Confidence: The fact that institutional investors are increasingly drawn to build-to-rent projects is a testament to the model’s long-term viability. Institutions recognize the potential for steady, predictable returns from rental income, adding a layer of stability to the market. This investor confidence further solidifies the notion that BTR is more than a passing fad.
What the Data Shows The recent data surrounding the BTR space is significant. According to statistics from RealPage Market Analytics,
“the number of units completed increased about 52% between 2021 and 2022. As of June 2023, there were over 700 planned and under construction build-to-rent properties across the U.S., accounting for about 86,543 units. Through 2026, about 116,000 units are projected to be delivered, though that number will likely change with construction delays and additional properties added to pipelines.”
Source: RealPage Market Analytics
In our home market of Atlanta, the Atlanta Business Chronicle reported in October of 2023 that
Build-to-rent developments are not a fleeting trend but a strategic response to evolving societal, economic, and lifestyle dynamics. As a residential design-build firm, we are committed to shaping the future of housing by embracing innovative models that meet the diverse needs of our clients and the end user. Build-to-rent represents a paradigm shift that aligns with the preferences and realities of contemporary living, ensuring its place as a significant and lasting force in the real estate industry.
Designing and Building with Harrison Homes
Since 2007, Harrison Homes has designed and built homes in Greater Metro Atlanta. In 2023, Harrison delivered 68 luxury rental townhome units in Hapeville, GA, pioneering one of the first upscale rental options in the city. Harrison Homes provides architectural design, interior design, procurement, horizontal construction, and vertical construction management. We offer developers a single source solution for designing and building a residential development. To get started, contact us. We’ll go through a simple discovery process to understand your project’s needs and financial requirements. Between our comprehensive package of services, experienced team and trusted subcontractors, your development will be constructed on time, within budget and at an unsurpassed level of quality.
Harrison Homes is excited to share that vertical construction will commence on five luxurious single-family residences in Ashford Park, Brookhaven. Site preparation
