The last 18 months has ushered in a near-total reshuffling of how and where North Americans live, work and spend their time. While this has had wide-ranging effects across most areas of the real estate industry, the housing sector is among the areas of the market that has seen the most drastic changes.
For more than a decade, younger people have eschewed the purchase of single-family homes in favor of renting multifamily units in large gateway markets and other cities. The pandemic, along with the increasing prevalence of remote work and demand for more space at home to support it, is giving rise to a new darling of the industry – build-to-rent detached homes. This serves as a compromise of sorts between two ends of the residential spectrum for newly untethered millennials, Gen-Zers and their budding families to enjoy the many perks of a free-standing home, while maintaining the sense of freedom and lack of long-term commitment associated with renting. It may also be borne of necessity, as many in these generations still carry the burdens of student loans and the fall out of economic recessions during their careers.
The fluid nature of the post-pandemic real estate market makes these endeavors inherently risky, however, and many of these luminaries and their owner-developer partners would benefit from Location Intelligence-based tools that can ensure there is adequate and lasting demand for build-to-rent product in their target geographies.
As mentioned earlier, conventional wisdom holds that the target demographics for this emerging sector are similar to the luxury multifamily sector – millennials and other members of the professional class, especially young families seeking more space outside of the urban core. Many of these prospective renters are coming from dense city neighborhoods, and will maintain many of the preferences that initially drew them to that environment.
The rise of data-driven decisions
By leveraging our Location Scores and other tools, the companies behind these ventures can add precision to what otherwise might be fairly inscrutable. Local Logic provides an ideal solution, quantifying the built world and painting a realistic picture of what it’s like to live, work, shop and play in the communities where these new developments are being proposed. By accessing our proprietary Location Scores and using our real estate analytics platform, key stakeholders can measure things like proximity to public transit and other transportation, the prevalence and quality of grocery stores and schools, and even more subjective factors like vibrancy and quietness.
Adopting a more data-driven approach can provide the ultimate edge in determining whether a given community will be able to attract single-family renters, as well as what kinds of amenities and other features might be included in programming to add new appeal. With many developers and investors taking on massive build-to-rent projects in outlying areas that they may be as-yet unfamiliar with, these tools provide a level of access to highly subjective, location-specific details that may ultimately determine their success or failure.
Like commercial real estate at large, today’s housing market is fluid and fast-evolving as COVID-related uncertainty lingers on. As we’ve seen in the past, the sector has huge implications for the economy at large, and developers/investors wading into the build-to-rent waters must operate with caution and precision. As many of these projects move forward and billions of dollars are invested in this growing asset class, location intelligence can help ensure they are positioned for success.