DFW's build-for-rent home surge continues despite changing trends

Dallas - NexMetro Communities, known for their luxury build-for-rent homes, has taken a significant step in their continued growth within the Dallas-Fort Worth (DFW) area, Dallas Metro News reported. The firm has completed the escrow process on two key sites in Anna and Cleburne last month, marking a high point in a series of ambitious projects in North Texas.

This milestone comes after the successful launch of NexMetro's first DFW development, initiating a marked increase in local residential construction. Currently, the company's portfolio includes the completion and ongoing development of 3,000 homes, a figure that represents both existing structures and those still under construction.

Among their exciting upcoming projects is the Avilla Boat Club in Fort Worth. This community will consist of a gated enclave of 107 luxury homes, exclusively designed for the rental market, according to recent reports. The sites in Anna and Cleburne are also expected to be available for leasing by late 2024, expanding NexMetro's innovative housing solutions at a time when affordable housing remains a pressing issue in Dallas-Fort Worth.

“Consumers are increasingly choosing to rent but don’t want to sacrifice the lifestyle of a home that they’ve worked to achieve,” Steve Fritzer, managing director for NexMetro’s DFW Division, said in a prepared statement. “We continue to see considerable demand in submarkets across Dallas and Fort Worth for our best of both worlds lifestyle offering.”

In further support of NexMetro's advancements, the Anna City Council has greenlit a mixed-use residential and commercial development. Spanning 65 acres near U.S. Highway 75, this planned construction will include 27 acres devoted to commercial development, catering to restaurants, local retailers, medical offices, banks, and other services.

The project, thoughtfully designed by Phoenix-based NexMetro, will also encompass a 24-acre residential cottage community. This will feature 211 single-family and duplex units, with private backyards and a variety of one to three bedrooms per unit, highlighting the company's dedication to offering unique and luxurious living options.

The Dallas-Fort Worth (DFW) region has become a leading force in the United States in the area of build-for-rent home construction. This sector has shown remarkable activity, even as there are early signs of slowing national demand for this growing property category.

A recent detailed report by RentCafe, part of Yardi Systems Inc., revealed that build-for-rent homes reached a record high in 2022, with 14,541 units completed nationally. This number represents a threefold increase in ongoing projects, a significant advancement in the field.

In the same timeframe, DFW completed 2,773 build-for-rent units, a striking increase of 441% from the previous year, reaching a 10-year peak. Over the past five years, the number of build-for-rent homes in North Texas has more than doubled, with an exact increase of 102%. Between 2017 and 2022, the region added 3,955 units, resulting in a total of 7,843 units across DFW, positioning it as the area with the second-largest supply in the country.

In addition to this growth, another 4,350 build-for-rent units are planned for construction in DFW, making it the second-largest upcoming collection of rental homes nationwide.

However, not everything is as promising as it seems. Although the build-for-rent construction pipeline is thriving, there are indications of shrinkage on a national scale. The demand for these modern home types is showing a noticeable decrease from previously high levels.

There are often conflicting estimates concerning build-for-rent construction, leading to varying conclusions. Nevertheless, a general review of the housing market reveals a clear slowdown in new single-family rentals across the country in recent quarters. Specifically, there were 7% fewer build-for-rent starts in the first quarter of this year compared to the same period in 2022.

The National Association of Home Builders has estimated that 69,000 single-family rental home constructions began in the year leading to Q1 2023, an increase of 17% from the 59,000 estimated in the previous four quarters.

While the impressive growth in DFW's build-for-rent sector paints a hopeful picture, a deeper look shows a more intricate and subtle situation, influenced by changing market factors. These complex elements may signal a change in growth patterns, reflecting the inevitable fluctuations and ongoing development of modern real estate. The trends seen in DFW could offer essential clues not only about the region but also about broader national trends in the build-for-rent sector.

Credit: Dallas Metro News, NexMetro, Fort Worth – Star Telegram