The build-to-rent (BTR) segment of the multifamily industry is expected to see robust demand in the future due to several demographic trends. Millennials, who are marrying and starting families, are choosing to remain renters due to factors such as college debt, high mortgage rates, and a lack of homes for sale. BTR offers a bridge to home ownership by merging renting with single-family home lifestyles. Additionally, downsizing Baby Boomers and a growing population of “pet parents” are also driving demand for BTR properties.
Factors such as the growth of major cities’ exurbs, which saw the greatest inbound migration in 2022 and 2023, are contributing to the expansion of the BTR segment. BTR communities in suburban areas provide the living space associated with single-family homes and cater to a broader range of residents at various life stages. The prohibitive cost of home ownership is also a significant factor favoring BTR growth, as Millennials struggle to cobble together down payments and face rising home prices.
With the continued growth of the BTR segment, the communities being developed are evolving to cater to residents’ diverse needs. Developers are creating communities with a variety of housing types, amenities, and design elements to attract residents at different life stages and lifestyle levels. BTR properties require different management skills compared to traditional rental communities, with a focus on landscaping and groundskeeping in larger developments.
The Cushman & Wakefield report emphasizes the importance of demographic tailwinds in driving the growth of the BTR segment. The average prospective home buyer can afford 34 percent less house than just two years ago, while home prices continue to climb. Given these circumstances, BTR properties are becoming a compelling option in today’s market. The report predicts that BTR numbers will continue to climb as more renters opt for this housing option over traditional home ownership.
Real estate companies like Marquette Companies and Lynd are developing BTR communities that cater to residents’ needs and offer a range of housing options, amenities, and wellness programs. By focusing on creating vibrant communities that foster social connections among residents, these developers are creating attractive living environments that appeal to a diverse range of renters. The BTR segment is expected to continue evolving as developers adapt to changing demographics and market conditions to meet the demand for rental housing in suburban and exurban areas.