More Houston MPC Developers Are Getting Serious About Build-To-Rent Homes
The coronavirus pandemic sparked a house-buying frenzy around the U.S. in 2020. Panicked workers and families took a good, hard look at their living arrangements and realized that they needed more space, farther away from other people.
In Houston, record home sales were accompanied by rising interest in multifamily rental opportunities in suburbia. But for those who want to live farther outside the city in a house but either can’t afford it or don’t want to buy, another option can be ideal: build-to-rent single-family homes.
Houston’s master-planned community developers are jumping on the trend. The Signorelli Co. President and CEO Danny Signorelli said his firm is “all-in” and has started a build-to-rent division that aligns with the development and homebuilding aspects of the company.
“What I'd say is, [the reason] why you know that it’s a no-brainer and it'll certainly work is there's not a master-planned community out there that doesn't have thriving multifamily already within the projects,” Signorelli said during a Bisnow digital summit March 25.
Large master-planned community developers like The Howard Hughes Corp. and Johnson Development Corp. have already incorporated multifamily into their communities in the greater Houston area. Those communities continued to receive interest from people leaving the urban core in search of more space and outdoor amenities.
Signorelli said build-to-rent is just a horizontal version of multifamily: It has the same property management but with better amenities and certain restrictions. It can be more beneficial to the local area because it offers a structured rental housing program, unlike traditional one-off or mom-and-pop operations.
Johnson Development Corp. co-President Doug Goff said his firm is also heading into build-to-rent development and has partnered with Toronto-based Tricon Residential, a major owner of single-family homes for rent in the southern U.S., to do that.
“We’re working with them and concentrating with some of our best builders to partner and put the neighborhood on the ground,” Goff said.
Goff noted that in many cases, build-to-rent neighborhoods are located right next to regular for-sale communities. The advantage, however, is that BTR has one source for maintenance, and all properties will be maintained to an acceptable level as part of the product.
The Howard Hughes Corp. President, Houston Region Jim Carman said that the master-planned community developer is exploring build-to-rent development in Bridgeland, the firm’s top-selling community in Cypress, northwest of Houston.
“We like the idea of an incubator space for folks that might ultimately buy in our community. And also, it attracts that renter by choice that we see in our multifamily that's looking for that different option,” Carman said.
Millennials are the largest demographic looking to purchase homes in Bridgeland in 2020, a notable change from Gen X, which had dominated for years, Carman said. In addition, there was a noticeable increase in people moving out of Houston’s Inner Loop.
Goff said that many millennials themselves grew up in the Houston suburbs and master-planned communities and relocated into the urban core when they left home. But now, the tide is turning.
“I think as they start having a family, they're looking at the quality of schools and things of that nature. And so we tend to get a substantial amount of that market,” Goff said.