The rental housing market offers diverse opportunities for developers, but navigating the complexities of apartment and build-to-rent (BTR) communities can be challenging. With shifting market demands and evolving consumer preferences, choosing the right type of community to build is crucial for long-term success. Read on.
The rental housing market is evolving with the introduction of new asset classes and product types designed to meet varying consumer needs.
Apartment Communities
Apartments are the most established rental communities, offering diverse living experiences from urban high-rises to suburban garden-style complexes. The primary apartment categories are:
- Mid-to-high-rise multifamily buildings: These urban and suburban complexes are distinguished by their height (5–10+ stories) and are often associated with luxury amenities.
- Low-rise multifamily buildings: These buildings under five stories are more common in suburban areas and provide higher-density living with modern amenities.
- Walk-up/Garden apartments: Spread across more significant properties, these multi-unit buildings are less than five stories and typically lack elevators.
Build-to-Rent (BTR) Communities
BTR is a newer, growing asset class in the rental market. It features homes purpose-built for rent rather than sale. These professionally managed communities must have a minimum of 25 units.
The main BTR housing types include:
- Single-family detached homes: Stand-alone homes without shared walls and with dedicated garages.
- Single-level rowhomes: Attached homes that share walls with adjacent units, with personal entrances and garages.
- Townhomes: Multi-level homes with shared walls and dedicated parking or garages.
- Horizontal apartments (HAPTs) or cottages: Smaller, detached units with no shared walls, often featuring fenced yards and surface parking.
- Mixed: A combination of the above housing types.
As rental demand continues to rise, having clear definitions of these communities is essential. It aids developers and investors in making informed product decisions, which is crucial in the evolving rental market. By understanding the key differences between apartments and BTR communities, real estate industry stakeholders can align their strategies to meet growing rental demand. The continued evolution of the rental market presents opportunities for growth and innovation in housing solutions.
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Thank you,
Blair Hildahl
BASE4 Principal
608.304.5228
BlairH@base-4.com
