By Angela Gonzales | Phoenix Business Journal
It’s no secret Phoenix is ground zero for the development of the wildly popular build-to-rent market — these are the single-family rental communities made famous by Phoenix-based NexMetro Communities and Mesa-based Christopher Todd Communities.
But now big-name developers — including El Dorado Holdings Inc., Empire Group LLC and Harvard Investments Inc. — are jumping into the fray with plans for billions of dollars in projects.
All based in Scottsdale, these developers have built their own city (El Dorado Holdings), master-planned communities (Harvard Investments) and some of the most luxurious apartments in Phoenix (Empire Group).
They’re getting in at a time when the population is growing so fast that traditional apartment occupancy is at 93.6% and the supply of existing homes for sale is at an all-time low — creating a need for more housing.
But these products are unique. There’s nothing like them on the market. These rental units are a hybrid between traditional single-family homes and apartment units, featuring detached units with their own backyards. They give renters more privacy, without hearing fellow tenants stomping around above them, separated by thin walls. Renters were gravitating toward this new lifestyle even before the coronavirus pandemic hit, but now they are even more appealing to those who are working from home.
While they’re not less expensive to build than traditional garden-style apartments — more land is needed for these single-story units, they are popular with renters and are getting noticed by investors, who have purchased several units by NexMetro and Christopher Todd Communities.
An expected 700,000 single-family units designed for the rental market are expected to be built nationwide over the next 10 years, but it’s still not enough to keep up with growing demand, according to a study conducted by RCLCO Real Estate Advisors.
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