Markets with Most Build-to-Rent Units Under Construction

Investor and renter interest in build-to-rent properties exploded during the pandemic and that interest continues to grow. As climbing interest rates and high home prices keep some would-be homebuyers in the renter pool, developers and investors are offering up some attractive alternatives in single-family homes built specifically for renters.

If the pipeline is any indication, demand for build-to-rent remains robust. Based on data 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. That is an extensive pipeline when considering this product type was virtually nonexistent just a couple years ago. Those numbers don’t include projects with units still under construction that already have residents living on the property.

So, what classifies as build-to-rent? RealPage defines single-family build-to-rent (BTR) housing as fully detached, semi-detached (semi-attached, side-by-side), row houses, duplexes, quadruplexes and townhouses built for rental. Attached/semi-attached homes must be separated by a ground-to-roof wall, have separate heating and cooling systems, individual meters for public utilities and, finally, no units located above or below. This property type is also sometimes referred to as built-for-rent, built-to-rent or single-family rentals.

As of June 2023, Phoenix, Dallas and Atlanta rank as the top three markets for BTR properties under construction – and by a wide margin. The combined 25,000 units under construction in these three markets accounts for over a third of nationwide total. In Phoenix alone, the nearly 14,000 units underway account for nearly 20% of the total U.S. figure of just over 73,000 units. That’s no surprise considering Phoenix has been noted as the birthplace of BTR.

In addition to the over 73,000 units already underway, another 13,541 BTR units are permitted across the U.S. Now, when permitted projects get underway – particularly in this challenging construction lending environment – remains a wildcard to consider in project timelines. Still, permitted projects show how popular a market is poised to become (or remain) in the BTR landscape.

Phoenix again serves as the nation’s leader for permitted BTR projects (2,571 units), followed by Texas markets Dallas (1,652 units) and Austin (1,465 units). Rounding out the top five markets for planned units are Atlanta (851 units) and Sacramento (768 units).

The future of BTR remains uncertain under prevailing economic headwinds. However, one thing is clear, investor interest remains in the BTR segment with some 136,000 units planned, under construction, construction lease-up or in lease-up.