Phoenix tops the nation in construction for build-to-rent communities, with more than 8,000 units currently under construction, according to a report released by Northmarq on Jan. 17.Dallas-Fort Worth is close behind Phoenix at No. 2, but no other U.S. city comes close to the torrid level of BTR construction in those two metros, the report shows.These build-to-rent communities that originated in Arizona are taking the nation by storm, offering luxurious detached rental homes in communities with resort-like amenities.The national BTR construction peak comes at a time when elevated mortgage interest rates are spurring homebuilders to transition a share of their lots to rental communities that originally were intended as for-sale subdivisions, according to the report.Developers of master-planned communities also are setting aside land for these rental communities in an effort to offer more choices for residents.”Phoenix remains a leader for build-to-rent development,” said Peter O’Neil, research director for Northmarq. “This was the first market where the product type really gained traction, so developers were particularly active acquiring land sites for new BTR projects a few years ago. Those land sites that were acquired in 2021 and 2022 are the units that are now under construction and being delivered in 2024.”While O’Neil said he expects to see projects under construction continue to come online in 2024, he also expects a significant decline in the number of new projects to begin construction this year.”Developers want to see how well the next wave of projects perform — how quickly they lease and what rents they can achieve — particularly with most estimates calling for a slower pace of economic growth in the year ahead,” O’Neil said.These trends aren’t unique to single-family rentals, he said.”We think similar trends will emerge in apartments, too,” he said. “This year and ne …
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