By Angela Gonzales | Phoenix Business Journal
An expected 700,000 single-family units designed for the rental market are expected to be built nationwide over the next 10 years, but that’s still not enough to keep up with the growing demand, according to a study conducted by RCLCO Real Estate Advisors.
This growing niche of single-family rental units are a hybrid between traditional apartment units and single-family homes, built as single-story, detached homes complete with their own small backyards. These rental communities also usually have amenities, such as a pool, dog park, and clubhouse.
“Given demographic trends, RCLCO forecasts much greater demand than the current pace of production, which could result in a significant supply shortfall, suggesting the sector presents a strong market opportunity in the coming decade,” according to the report.
Phoenix is ground zero for this unique product that is catching on not only among renters, but other builders who want to grab a piece of this action and investors with voracious appetites for these investments.
Phoenix-based NexMetro Communities has nearly 5,000 homes in 32 projects either completed, under construction or in preconstruction in Phoenix, Dallas, Denver and Tampa, Florida, with another 1,500 units in predevelopment in those markets.
Despite the coronavirus pandemic, leasing at NexMetro’s Avilla projects has been strong, while construction has continued and lending and debt markets have come back, said Josh Hartmann, CEO of NexMetro.
Industry experts believe a drop in home ownership rates will fuel a significant increase in demand for rental housing, Hartmann said.
With home ownership declining to 62.1% — the lowest rate in more than 20 years — Hartmann expects demand for rental housing to continue to increase.
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