Demand for Build-to-Rent Townhomes Grows

Renters’ ongoing desire for affordable, spacious housing has been a major driver behind the growth of the build-to-rent (B2R) market over the past five years, and in particular, for B2R townhomes. While challenging economic conditions caused overall B2R starts to decline in 2024, the sector is expected to see long-term growth over the next few years. Citing research from real estate finance and advisory services firm Walker & Dunlop, Multi-Housing News reports that there are over 2,480 active leasing or stabilized B2R projects in the U.S., totaling more than 326,000 rental units. Additionally, another 897 B2R communities are planned or under construction, which are expected to add more than 167,000 units.

Townhomes currently account for just 35% of all B2R community types, but they are seeing the fastest rent growth and higher occupancy rates. This is likely because of the space and privacy they provide tenants without the price of detached units. 

For renters, townhomes have certain advantages despite the downside of walls shared with neighbors. They typically offer lower rents than comparable detached homes and larger unit sizes than horizontal multifamily. They may also feature fenced yards for pets.

“BTR townhomes strike a smart balance,” noted Doug Motley, managing principal of investment and development firm JLAM. “They deliver higher density than detached homes, making projects more financially viable while still offering residents the space and privacy they seek.”