The Two Fastest-Growing Types Of Built-For-Rent, And The Metro Markets That Love Them


Yardly McDowell is a new horizontal apartment building by NexMetro in Phoenix that has just begun leasing. The project, which was completed in 2023 and is currently in the leasing phase, has been built since then. One-bedroom units with private backyards rent for $1,624-$1,699 per month for 647 square feet ($2.51 to $2.63 per month).

townhome communities. The two BTR categories that are growing the fastest are horizontal apartment communities and, 02011010townhome communities. This is based both on the number of completed units, as well as our market study book. Of course, traditional single-family developments (full-sized homes on individual lots) are coming out of the ground in large numbers as well, but the fastest growth right now is in these two “denser” categories.

The exhibit below shows the top ten markets ranked by the number of horizontal- apartment units delivered since 2016 (as of mid-2023). These kinds of rental units are usually marketed as “cottages,” and they offer two main advantages over traditional apartments: private outdoor space for each unit, and few or no shared walls.

has the most activity in this product type.Data from CoStar through Q2 2023, analyzed by Hunter Housing Economics

Phoenix: Where It All Began

We’ll start with the 900-pound gorilla that was the birthplace of BTR: namely, Phoenix. Phoenix, especially the horizontal-apartment style of development, has been the center of built-to rent activity across the country since its inception. Single-family detached housing subdivisions for

rent are the bread-and-butter type, but townhome communities built to rent and “cottages” are growing the fastest.

Hunter Housing Economics

The BTR business started out in Phoenix, born out of the distress of the Great Financial Crisis. Immediately after the GFC, investors were able to aggregate plenty of supply from foreclosures, but by 2012, they had exhausted much of that supply, and started to build whole new communities of homes for rent.

Data from CoStar, Analyzed by Hunter Housing Economics

With the addition of thousands of units of a similar type (plus a large number of traditional apartments still under construction), it is important for developers in this market to consider the quality of their location relative to better-located existing rentals. This will become increasingly important as we move into 2024. According to CoStar’s data, since 2016, about 35% of new multifamily builds in the West Valley have been horizontal apartments, compared to 13% for Phoenix overall. According to CoStar’s data, since 2016, about 35% of new multifamily builds in the West Valley have been for horizontal apartments, compared to about 13% for Phoenix overall.

Several new rental developments are planned north of Dallas. This submarket shows an example.

The blue color indicates a built-to-rent project that is coming to market soon.

Hunter Housing Economics

apartments in the area.

Several BTR developments have either been developed, are in the process of being constructed, or are in planning stages. These communities are developed by well-known developers such as Canvas, BB Living and NexMetro/Avilla. In a fascinating contrast, DFW has only 4% horizontal multifamily construction compared to 13% for Phoenix. This tends to suggest that Dallas has a longer potential runway ahead of it than Phoenix before it starts to show any signs of over-saturation in this product type.

Spotlight on Atlanta: A Large Market Still in “Early Innings” for BTR

Below are some middle-sized markets that are still in aggressive growth mode, with a lot of runway left in front of them. Huntsville is still gaining momentum with 1,093 completed units since 2016. Here are the CoStar numbers for 2o16 through mid-2023 deliveries:

Huntsville – AL 1,093

Greeley – CO 1,090

Nashville TN 1,020-

Las Vegas NV 931-

Orlando – FL 908

Nashville – TN 1,020

Las Vegas – NV 931

Orlando – FL 908

Within Orlando, the northwest quadrant has seen the greatest number (452) of new

In Central Florida, by far the two largest concentrations of horizontal apartments are in Northwest

Orlando and Osceola County.

Data from CoStar, 2016 through 2Q 2023

horizontal apartments, followed by Osceola County, with 407. Data from CoStar, 2016 through 2Q 2023

right area

. The BTR segment is one of the most sought-after by investment firms in the coming years. However, they are more cautious than ever about the assumptions made for rent and lease-up.