A real estate team is dotting the outskirts of metro Atlanta with build-to-rent homes, a fast-growing sector buoyed by the dearth of attainable entry points into homeownership.
Over the next couple of years, Atlanta-based Two Capital Partners plans to build 12 communities with 2,300 single-family homes and townhomes across the Southeast, more than 1,000 of which will be built in Georgia. All of those properties will be managed by Atlanta-based RAM Partners.
One of the communities recently opened in Winder, a rural area roughly 50 miles to the northeast of Downtown Atlanta. Tessa Barrow Crossing comprises a mix of 235 townhomes with two, three or four bedrooms. It offers concierge services, a pet park and dog spa, pool, co-working space, fitness center and outdoor gathering spaces.
Construction is underway on five Tessa communities, including a 217-unit project in Gainesville and a 140-unit project in McDonough. Additional projects are planned in Covington, McDonough and Sugar Hill.
The build-to-rent sector has exploded in Atlanta and other Sun Belt markets. U.S. single-family rental completions have steadily risen since 2021, with a peak in the second quarter of 2023, according to a September report from commercial real estate services firm Berkadia. It forecasts a long-term supply increase with 115,000 units in the pipeline.
“If someone can’t afford to buy a home, this is getting them into a suburban neighborhood with a home-like feel and good schools,” said Brenda Lindner, executive vice president and managing partner at RAM Partners.
Build-to-rent tends to be less susceptible to swings in the economy, according to Berkadia’s report. The asset class appeals to lenders and investors for several reasons, including consistent rent growth, high retention rates and lower operating expenses.
Outlying suburbs and exurbs are prime targets for build-to-rent communities, given the relatively lower cost of land, growth in manufacturing and ability for remote workers to plant roots farther away from job centers.
The sector taps into generational shifts – some tenants prefer to rent for the convenience of a maintenance-free lifestyle. It is also an option for would-be buyers in metro Atlanta and elsewhere held back by elevated mortgage rates and home prices.
“We’re renting to first-time homebuyers,” Lindner said. “They were traditionally apartment renters, and now it’s time to buy a house. But they can’t afford to buy because interest rates make it cost-prohibitive. So, this is their next step.”