Low Build-For-Rent Supply Drives Up Market Competition

Market demand for build-for-rent development is at an all-time high, but with a major supply shortage of developable land, buyers are seeing serious affordability issues and increased competition, says John Burns Real Estate Consulting.

Without much available land, investors are seeking out profit among spaces where rezoning, redevelopment plans, and entitlement issues make it easier for developers to secure the land they need.

If there used to be a hot tub full of cash for build-for-rent (BFR) deals, now there is an Olympic-sized swimming pool. Demand for BFR development is at an all-time high. BFR developers can usually outbid their competitors for land. Mike Moser, CEO of Starwood Land Advisors, explains to us how his team strategically focuses their investment efforts in the BFR and equally competitive general residential development world.

• Developable land is the biggest supply shortage.
• Mike predicts 2021 new home sales will be below 800,000 and won’t go much higher in the near-term.
• Soaring home prices paired with rising interest rates are going to create serious affordability issues for home buyers in the future.
• However, Mike sees solid market fundamentals for the foreseeable future. When the next recession does hit, it will not be as dramatic as the last.
• Affordable markets with diverse economies will fare best.

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