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A major Southeast commercial real estate developer is teaming up with Chicago-based investment management firm Heitman to spearhead more than $200M in new single-family build-to-rent homes across four states.
Charlotte-based Crescent Communities and Heitman, along with an unnamed state pension fund, plan to start construction this spring on Harmon by Crescent Communities rental neighborhoods in North Carolina, Texas, Tennessee and Arizona, the company announced Thursday.
The initial $235M investment will erect new three- and four-bedroom townhouses and single-family detached home communities full of amenities that will be offered for rent only, according to the press release.
“The expanding relationship with Heitman during a very challenging capital markets environment is a testament to this growing sector and the confidence in our brand,” Crescent Senior Managing Director Tony Chen said in the release.
Crescent is known for its Novel apartment brand and also develops and owns office, industrial and life sciences real estate. It first entered the build-to-rent category three years ago when it teamed up with Sumitomo Forestry’s DRB Group as its builder, with plans for communities in Atlanta, Charlotte, Raleigh and Charleston.
The Heitman partnership comes as build-to-rent is hitting a new peak. Developers unleashed 27,500 for-rent houses in 2023, 75% more than 2022, according to data compiled by RentCafe. More than 45,000 build-to-rent homes are underway in the U.S., with the bulk projected to deliver in 2025. Phoenix has the biggest pipeline with 4,000 units, followed by Dallas and Atlanta.
The industry is surging due to the high hurdle both prices and interest rates have placed on households to buy their own dwellings, along with the ongoing housing shortage. The build-to-rent platform gives households the space and features of single-family living without the capital outlay for maintenance and upkeep, industry experts say.
“We believe demand fundamentals for single-family rental housing will continue to grow at an attractive pace," Brian Pieracci, head of North America private equity at Heitman, said in a statement. "Over the next decade, we expect a growing number of older millennials and retirees to rent as median home prices have grown at twice the pace of median incomes since 2000, making home purchasing less attainable and far less desirable.”
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