News Summary

Phoenix has emerged as the leading city for build-to-rent (BTR) single-family rental homes in the United States, currently developing over 13,000 units. Its strong job market, presence of Fortune 500 companies, and commitment to sustainability contribute to this boom. Surrounding suburbs and other Arizona cities are also joining the trend, indicating a shift in rental demand toward larger homes in suburban areas. Despite challenges like rising material costs and labor shortages, the BTR sector is poised for significant growth, with demand for affordable and spacious homes climbing.

Phoenix Takes the Lead in Build-to-Rent Boom!

When it comes to build-to-rent (BTR) single-family rental homes, Phoenix is stealing the spotlight across the nation! With a whopping 13,113 rental units currently in the works, it’s no wonder that this sunny city has earned its title as the BTR capital of the United States.

Why the Surge in Phoenix?

The secret sauce behind Phoenix’s booming BTR scene lies in its robust job market, abundant presence of Fortune 500 companies, and a growing commitment to sustainability. With nearly 3,000 units located right in the heart of Phoenix, it’s clear that urban living is flourishing. But it doesn’t stop there—surrounding suburbs like Buckeye, Surprise, Goodyear, and Queen Creek are getting in on the action too, each adding between 1,000 and almost 2,000 rental homes to the mix.

Tucson and Flagstaff Join the Party

While Phoenix is basking in glory, cities like Tucson and Flagstaff are also making contributions to Arizona’s BTR scene. Tucson has 659 units under construction, while Flagstaff adds a solid 200 units. Together, they hold the promise of expanding the options available to renters in the state.

What’s Happening Elsewhere?

Following Phoenix, Dallas takes the silver medal with 8,470 single-family rentals underway. Yet, Texas as a whole is leading the charge in construction, boasting a total of 21,812 single-family rentals on the drawing board. Major Texas cities like Houston have 4,613 units in progress, Austin is building 4,313, and San Antonio is adding nearly 3,000 new homes.

Moving east, Atlanta ranks third with an impressive count of 6,885 units across 43 new communities. Other growing areas in the Southeast, such as Charlotte and Orlando, are also looking to expand their rental markets with thousands of new BTR units on the way.

A Shift in Rental Demand

The rental landscape is changing—thanks to the pandemic, many people are turning away from the small apartments in crowded urban centers and are opting instead for larger homes in more affordable suburban areas. With home prices on the rise and a greater number of individuals working remotely, it makes sense that the interest in single-family rentals is climbing.

The Big Picture

On a national scale, more than 110,000 single-family rental homes are under construction, poised to increase BTR inventory by an astounding 53.5%. The BTR sector is not just a passing trend; it’s expected to see a significant supply increase of between 125% to 255% in seven states. Nebraska even leads the charge with a predicted 255% increase in rental supply, while North Carolina anticipates a 152% jump.

Affordability and Demand Drive Growth

More renters than ever are choosing BTR units over starter homes, saving around $1,000 per month in the process. With a heightened demand for spacious and amenity-rich homes, developers are shifting their focus to suburban areas, where costs are lower and construction can often happen more swiftly.

Challenges Ahead

Despite these remarkable growth trends, the BTR sector faces hurdles such as rising materials costs, labor shortages, and higher rates for construction financing. Nevertheless, the demand for these homes remains unshaken. As more people identify themselves as renters by preference, the future of the BTR market looks bright and promising!

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