As part of a panel discussion at the National Multifamily Housing Council (NMHC) in Washington, DC in Nov. 2021, Markerr’s research analyst, Galen Faurot-Pigeon shared the company’s take on the single-family rental (SFR) asset class, predicting that it will likely outperform over the next 5 to 10 years. Galen was joined by Marti Burrows, Managing Director of SFR/BTR for Greystar, and the discussion was moderated by Chase Harrington, President and CEO of Entrata.
Here are a few key takeaways from the session:
1. Demographics are key in SFR. Investors and developers should look for “first kid, second dog” families
Galen pointed to Markerr’s data about growth in age cohorts in the workforce, which is favorable for the typical SFR profile. The 35-45 age cohort will likely show the most growth in upcoming years. Marti shared that many of Greystar’s SFR/BTR tenants fit the “first kid, second dog” profile, and need more space for their growing families. According to Marti, over 75% of SFR tenants have a pet!
For more insight into the drivers of SFR growth, download our report Renting the American Dream.
2. Some markets are inherently more amenable to SFR growth due to density and layout
Suburban and exurban areas are prime for SFR and BTR development, and those are exactly the areas employees have moved to since the onset of Covid. Marti shared that 70% of Greystar’s SFR properties have at least 3 bedrooms, which requires more space and less density.
3. Operations and maintenance are different for SFR compared to MFR
New technology and longer tenant tenure has allowed SFR neighborhoods to run effectively with fewer office staff than required by a conventional MFR property. For example, potential residents may use self-guided tour software instead of meeting with a leasing agent. Maintenance staff needs are different as well; as SFR residents tend to stay longer, there is less need to repair units between tenants.
Galen pointed out that these factors also present challenges such as getting to economies of scale and creating effective operations processes, which could interfere with the success of new projects.