Crescent Communities & Heitman Launch $235M Build-to-Rent Venture in NC, TX, TN & AZ

A new collaboration between a prominent Southeast commercial real estate developer and a Chicago-based investment management firm is set to usher in over $200 million worth of new single-family build-to-rent homes across four states.

Project Details

Charlotte-based Crescent Communities, in partnership with Heitman and an undisclosed state pension fund, has announced plans to commence construction this spring on Harmon by Crescent Communities rental neighborhoods. These neighborhoods will be established in North Carolina, Texas, Tennessee, and Arizona.

Investment and Property Details

The initial investment of $235 million will facilitate the construction of three- and four-bedroom townhouses and single-family detached home communities. These properties will be equipped with various amenities and will be available exclusively for rent.

Growth and Confidence

Tony Chen, Crescent's Senior Managing Director, expressed confidence in the venture amid challenging capital markets. He highlighted the expanding relationship with Heitman as indicative of the sector's growth and the trust in Crescent's brand.

Background and Expansion

Crescent, renowned for its Novel apartment brand, diversifies its portfolio to include office, industrial, and life sciences real estate. The company entered the build-to-rent market three years ago, partnering with Sumitomo Forestry’s DRB Group. Initial plans focused on communities in Atlanta, Charlotte, Raleigh, and Charleston.

Industry Trends

The partnership with Heitman coincides with a peak in the build-to-rent market. Developers have introduced 27,500 for-rent houses in 2023, a substantial increase from 2022. Currently, over 45,000 build-to-rent homes are in progress in the United States, with many expected to be completed by 2025. Phoenix leads in development with 4,000 units, followed by Dallas and Atlanta.

Market Dynamics

The surge in build-to-rent housing is attributed to rising home prices and interest rates, exacerbating the challenge of homeownership amid housing shortages. Industry experts note that build-to-rent properties offer the space and features of single-family living without the upfront costs of maintenance and upkeep.

Future Outlook

Brian Pieracci, Heitman's head of North America private equity, anticipates sustained growth in demand for single-family rental housing. He points to demographic shifts, with older millennials and retirees increasingly opting to rent due to soaring home prices outpacing income growth since 2000.