SFR’s growth will overtake these asset classes in 2022

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Growth in single-family rentals is expected to outpace growth in multi-family, office, retail, storage and hospitality, according to a new report from Walker & Dunlop by 2022.

The single-family home rental and rental construction sectors are among the fastest growing across all asset classes, with institutional investor interest in the space booming. While SFR’s market has traditionally been dominated by individual or small-scale investors, the Great Recession changed everythingand the trend has only accelerated under the weight of the COVID-19 pandemic, which has thrown new migration patterns into the mix.

And where this demand increased, institutional capital followed. Walker & Dunlop estimates the SFR market at around $ 3.4 trilliona staggering number, of course, compared to the overall multi-family market, which is estimated at $ 3.5 trillion.

Institutional investors currently represent less than 2% of SFR (compared to 55% of multi-family), but as more and more young families and retirees seek to rent SFRs with good equipment and large land, more and more investors are turning to the SFR space to expand their portfolios.

Capital is also flowing into the emerging rental construction submarket in this space. BFRs are purpose-built homes to be operated as single-family rental investments, similar to traditional multi-family homes, and all homes within a BFR are contiguous, notes Walker & Dunlop. It is estimated that 5-10% of all new construction is BFR.

“WCR is a relatively new concept among SFR investors, domestic builders and developers,” the report says. “It has become increasingly popular with investors in recent years, including traditional multi-family developers. Although the BFR market represents only about 5% of new homes built, it is growing rapidly and will continue to do so as new entrants start BFR operations.

As the BFR movement grows, a new class of operators, domestic builders and institutional capital providers see it as a standalone investment model. Builder Lennar launched a $ 4 billion SFR platform with lead investor Centerbridge in March, and JP Morgan Asset Management made a 2020 $ 625 million equity commitment to American Homes 4 Rent to develop approximately 2,500 homes in high growth markets in the West and North. South East.


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