January 10, 2022, 8:00 AM MST
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Two real estate firms known for developing and managing student housing are teaming up to build single-family rental properties, betting on the demand for suburban homes that was ignited by the pandemic.
Harrison Street and Core Spaces entered into a $1.5 billion joint-venture to build communities of homes in Austin, Denver, Nashville, and a handful of other cities. The firms are targeting sites near job centers and designing communities to appeal to young families who aren’t ready to buy, as well as older renters who are looking to downsize.
The partnership comes amid a boom in funding for single-family rentals, as landlords look to invest behind a shift to the suburbs that took off in the early months of the pandemic. Over the last two years, investors have committed more than $30 billion to buy and develop rental houses, according to deal announcements compiled by John Burns Real Estate Consulting.
“It’s hard to ignore the demographic trends,” said Justin Gronlie, a director at Harrison Street. “In our opinion, there’s going to be demand for the product in the long term.”
Harrison Street, which has about $39 billion in assets under management, is better known for senior housing and student apartments. It has developed roughly 20,000 units of cottage-style student housing, giving the company confidence that rental homes can be effectively managed.
A typical community will have as many as 300 houses and sit 20 to 35 minutes from an employment hub, said Core Spaces President Dan Goldberg, who joined from Blackstone Inc. about a year ago. The joint-venture will likely develop about 4,000 homes, with access to amenities like fitness centers and co-working spaces. The idea is to follow a road map from the student housing industry, where purpose-built rentals lured college students away from apartments managed by mom-and-pop landlords.
“Student housing had existed for a really long time, but wasn’t until 15 years ago where there was something built that was meant to be rented by students,” Goldberg said. “There is a lot of untapped demand for this from existing single-family renters.”
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