Large Floor Plans in BTR Are Stealing Renters From Apartment Living
Updated: May 4
March 08, 2022, at 07:28 AM
BTR properties underscore demand for large floor plans with three or more bedrooms.
Single-family rental and build-to-rent are the new buzzwords of commercial real estate. Both sectors are seeing soaring demand, but Sudha Reddy of Haven Realty Capital notes that demand for single-family rentals underscores the need for housing with three or more bedrooms, otherwise known as large floor plan housing.
“Larger floor plan rental housing with three bedrooms and four bedrooms have never previously been purpose-built,” Reddy, the CEO of Haven Realty Capital, tells GlobeSt.com. “New multifamily projects primarily consist of one and two-bedroom units with a small percentage of three bedrooms. Build-to-rent provides renters the opportunity to rent larger three and four-bedroom units akin to traditional for sale housing, which include garages and yards, in a housing community.”
Haven has a long history in the sector. It has invested in single-family rentals since its inception in 2010, and exclusively invested in SFR properties through 2014 when it began integrating a multifamily strategy as well. “In 2015, we began investing in multifamily in a number of markets where we had previous SFR exposure,” explains Reddy. “We quickly realized that many investors were more comfortable with multifamily than SFR because of the perceived management and capital deployment efficiencies of owning an asset in one location.”
Reddy believes that the build-to-rent space blends the SFR property type with multifamily, supplying an emerging demand segment for purpose-built large floor plate rental housing. “Haven sees a tremendous opportunity to bring quality housing and professional management to this underserved class of rentals,” says Reddy. “Demand for newly constructed single-family rentals by families and empty nesters is greater than ever.”
Haven has not only seen demand increase but capital as well. “Importantly, investor demand in BTR projects is equally strong. Traditional multifamily investors have become comfortable with investing in BTR because of the single location, strong single-family rental demographics, and economic returns,” says Reddy.
These are the same reasons why Haven is so active in the sector. “We are bullish on BTR because it addresses a real supply and demand imbalance for larger floor plan rental housing in the United States with an opportunity to bring a better tenant experience with high-quality homes and professional management,” says Reddy. “We believe the single location component of the strategy will draw large institutional multifamily equity and debt providers to the sector thereby increasing liquidity.”