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One of the largest commercial real estate services companies in the U.S. just added another service.
JLL has launched a division specifically for advising single-family rental investment, the company announced in a statement on Thursday. The new arm will be under the JLL Capital Markets Group and led by Bill Miller, co-head of JLL Multi-Housing Group. Also joining the national team will be Matthew Putterman, Chris Shea and Zach Nolan.
JLL's move reflects the big business that owning single-family homes has become over the past few years. Single-family REITs outperformed REITs overall in 2020 by 23% and institutional owners control only about 3% of the market, JLL said in its release.
The conditions imposed by the coronavirus pandemic have specifically benefited the single-family rental market by sending people away from cities in search of more living space, even if they don't have the finances or desire to own a house themselves. Companies that have owned large portfolios of such houses, with Invitation Homes and American Homes 4 Rent among the largest, reported portfolio-wide rent growth at a time when most urban rents are dropping.
“Demand for less-dense environments, more space for work and school, and a desire for the ‘lock-and-leave’ lifestyle support substantial demand for single-family rental homes,” Putterman said in the statement. “Since the Great Financial Crisis, the adoption of new management and leasing technologies has enabled investors and operators to aggregate substantial portfolios in ways that didn’t previously exist.”
Adding fuel to the potential fire is a development pipeline that doesn't match the level of the urban multifamily market when its own demand indicators were this strong. More developers are looking to build groups of single-family homes for the specific purpose of renting them out, adding supply in a way that both doesn't seem like enough to meet demand and makes portfolios easier to aggregate.
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