Build-to-Rent Development: Here’s Where BTR Is Blooming

Build-to-rent development has exploded since the COVID-19 pandemic, when a fresh construction boom of this niche product swiftly erupted. We are now witnessing a possible peak of this trend, with developers bringing 27,500 BTR units online last year, according to a new RentCafe report that leverages Yardi Matrix data. This was an all-time high for BTR completions.

Key Takeaways:

• Out of the top 20 metros for BTR development, 14 saw inventory growth at a 10-year high.
• Texas ranked first for units underway, at 15,600.
• Yardi Matrix expects more than 31,000 BTR units to come online this year, roughly 6.2 percent of multifamily deliveries.
• After this year, data suggests that deliveries will taper off, but still remain above the decade average.

As hybrid work became the norm post-pandemic, build-to-rent development offered a clear alternative from an ever-increasing cost of home ownership, as well as from crowded apartments in major metros. So, who is BTR for? According to Yardi Matrix research, demand is highest among Millennials and blue-collar workers, as both categories are strongly priced out of ownership.

For tenants, BTR can offer larger spaces than typical multifamily floorplans, along with better amenities, such as a yard, on-site maintenance, pools etc. What's more, the niche product appeals to investors. Yardi Matrix data shows that out of the 20 million SFR units, only between 3 and 4 percent are institutionally owned. Out of these, there are roughly 340,000 units in BTR communities, leaving room for growth.

Where is the BTR construction boom strongest?

Phoenix was by far the market where build-to-rent development shined brightest in 2023. Completions totaled 4,030 units, more than double year-over-year and at a 10-year high for the metro. Although the metro’s fundamentals took a dip as of late, it still registers one of the fastest-growing populations, while also having the largest industrial pipeline in the nation and among the highest deal volumes for office properties.

In other words, Phoenix’s economy is attracting more people and the flexibility and freedom that BTR offers is clearly in high demand. The metro also ranked first for BTR units under construction, at 7,236, as well as most units added over a 5-year period, 9,345—a 310 percent increase.

Four Texas metros made the top 20 ranking, indicating build-to-rent’s popularity is growing in the state at a fast pace. Dallas took the lead—2,694 units—with more than half of BTR units completed across the entire state last year. Although a slight decline from 2022, this was Dallas’ second-best year in a decade.

Clocking in at number three, Atlanta was the only other metro on this list that had more than 1,000 BTR units come online last year. It also registered a 10-year high, with 1,981 units completed and ranked third for total deliveries in a 5-year period, at 3,536 units. Additionally, Atlanta’s multifamily pipeline was also among the top 10 nationwide at the beginning of the year.

Several Midwestern metros recorded 10-year peaks for BTR deliveries, including Kansas City, Mo. (636 units), Columbus, Ohio (625 units) and Akron, Ohio (412 units).

Nationwide, nearly 27,500 units came online in 2023, which was a 75.3 percent increase year-over-year and represented 6.7 percent of multifamily deliveries. The top 20 metros accounted for 17,817 units out of the total.

Build-to-rent boom continues in 2024

Phoenix remains in the lead for current construction as well, with 7,236 units underway, which means a 58.4 percent expansion of inventory. It was followed by two Texas metros—Dallas (6,481 units) and Houston (4,836).

San Antonio (1,886) and Austin (1,851) also made the list, contributing to the Lone Star state having the most units underway (15,600).

Florida also stood out as a hotspot for the BTR construction boom, with four entries on the list. Jacksonville ranked first in the state, with 1,836 units underway. Notably, this metro’s BTR inventory also expanded by 370 percent over the last 5 years. It was followed by Tampa (1,352 units), Orlando (1,147) and North Port (994).

Riverside and Sacramento, Calif., two West Coast areas, also made it in the top 20 list for construction activity, with 946 and 875 units underway.

BTR construction levels will likely peak this year, Yardi Matrix data suggests. There are 44,700 units under construction across the U.S., of which roughly 31,600 are expected to come online this year, should market conditions hold. After this, deliveries will likely cool off but remain above the annual average of 6,991 units delivered between 2013 and 2022.