Housing Hotspot: Build-To-Rent

The Great Recession caused a great disruption in home ownership due to reckless lending practices.  One result has been the rising numbers of single-family rentals as investors purchased existing homes one-by-one.  This has evolved into the current “Build-to-Rent” (BTR) market where new communities of homes, managed professionally, fill the gap between conventional rental apartments and home ownership.  BTR has attracted the attention of many national and regional homebuilders to maintain a certain volume of construction for their crews and shareholders.  These BTR communities can feature amenities like a clubhouse, pool, dog park, and may even be gated.

BTR communities attract all demographics, but especially millennials often saddled by school loans, credit card debt, rising interest rates and lack of savings for a down payment.  As they begin to build families, the notion of suburban living in a single-family home instead of an apartment becomes more important with most wanting 3- to 4-bedrooms.  Another cohort is those who choose renting to avoid being tied down to a location long-term and the maintenance required of homeownership.

In order to minimize costs, BTR developers look toward standardization wherever possible.  In some of our projects there are only three window sizes, a limited set of door sizes, and identical kitchens where parts can be kept in inventory for quick replacement if necessary.  Flooring is all vinyl and kitchen islands are dry to minimize plumbing.  Occupants enjoy small private yards for their children and pets.  Plans range from 1300 to 2100 SF, 3- to 4-bedrooms + loft.

The conventional thinking has been that BTR works in the Southwest where inexpensive land was available, or in the farthest exurbs of Southern California.  Another client has taken a different tack, locating innovative BTR neighborhoods within greater Los Angeles with projects in San Pedro, Granada Hills, and near downtown LA.  These include 3-story townhome and small-lot-ordinance single-family homes that appear as townhomes.  Our Blake Avenue project is located in Frogtown, wedged between Elysian Park (Dodger Stadium), the 5 Freeway, and the Los Angeles River.  Once a dilapidated commercial bakery located on the bank of the concrete river across from the former Taylor Union Pacific rail yard, today, the location is a new hot spot.  Near downtown and the Burbank Media Center, Frogtown is gentrifying.  Key is the ambitious Los Angeles River Revitalization project, where the former rail yard will be transformed into a major park and nature center and the concrete river will be transformed into a natural river again.  The Blake Avenue project will include live-work units and homes with ground floor home office space overlooking the expansive riverfront and bike paths.

Whether in town or in suburbs with good schools, BTR is one of the fastest growing trends in real estate.  Enjoying a new home with great features without worrying about maintenance is an option many find fits their lifestyle.