As developers, many of whom are making their debuts on the market, continue to build thousands of new homes for rent in metro Phoenix.
Colliers International, in exclusive research for Phoenix Business Journal, found that 12,100 new units are currently under construction and another 5,700 more are planned at various stages.
Thomas Brophy is the research director at Colliers International. He said that there are currently 8,200 rental homes available. The average occupancy rate of these communities is 94.4%.
Many of these single-family homes have been built in rental communities that offer amenities like pools, barbecue areas and clubhouses. Some of these houses are single-story detached units with backyards while others are townhomes. They're not the same as traditional three- or four-story garden apartments.
The average monthly rental rate is $2,069 - a little less than the $2,292 for a single family home that was not built in a community with amenities. He said that the average rent in metro Phoenix was $1,627.
Developers debut BTR in Valley
Mill Creek Residential, based in Boca Raton in Florida, is launching its BTR in Phoenix metro with Amavi Aster Ridge, located near Interstate 17 and Anthem Way, in Anthem to the north of Phoenix.
According to the Tempe-based Vizzda database, Mill Creek paid K. Hovnanian Homes $11 million for 177 lot.
The first homes are expected to be finished in February 2024.
Included will be an amenity centre, a community pool, ramadas, and a playground with open spaces.
Sam Griffin, vice-president of land acquisition at Mill Creek's Scottsdale branch, explained that the location of the site and the strong inflow of migrants to the Phoenix MSA, as well as the growing employment sector of Deer Valley, Anthem and surrounding areas, were what attracted the developer into the Phoenix market.
Scottsdale Investment Management is also new to BTR. Since its founding in 1978, it has focused on commercial developments, including office and retail, in the metro Phoenix area.
Real estate and development firm broke ground in Laveen on a BTR project worth $50 million, which will include 172 apartments.
The 15-acre residential development at 35th Avenue, just south of Southern Avenue, is scheduled to be finished in early March 2025. The project will feature a mix between duplexes and standalone units, as well as a resort style pool and spa, gym, play areas and preparation areas, two child's parks, green belts, and a pet park.
- UrbanStreet Group of Schaumburg in Illinois is also making its Phoenix debut by developing a 307 unit BTR community at a parcel measuring 16.91 acres in Goodyear.
Patrick Burch, John Klocek, and ABI Multifamily, based in Phoenix, represented Washington-based Blueprint Capital as the seller of the vacant parcel that sold for $14,5 million last month.
The Douglas at Goodyear Airport Commons will be constructed at the southwest corner between North Bullard Avenue, and W. Van Buren Street just south of Interstate 10
The land is located near the popular Foreign Trade Zone, which is attracting developers and large employers such as Microsoft.
Lisa Cioffi said that these BTRs will be bigger than others in the area, and have garages attached and high-end finishing.
She said that "our common area amenities will be a new benchmark among BTR Projects in and around Goodyear." We are confident that demand for multifamily homes and build-to rent communities in Phoenix will remain strong over the next few years.
Cioffi stated that while Phoenix is a brand new market for UrbanStreet other projects are at various stages of planning.
BTR subsidiary is created
GTIS Partners of New York, an international real estate investment company, has launched Tavalo as a subsidiary that is dedicated to the development of BTR communities.
The plan calls for the construction of eight communities, totaling 2,100 BTRs, in metro Phoenix as well as San Antonio, Texas, and Port St. Lucie in Florida.
GTIS completed the construction of Tavalo at Cadence in Mesa, with 197 BTRs using HercuWall panelsized wall system. This will reduce energy costs from 20 to 40 percent.
The company has also plans to build in Queen Creek and Glendale.
- A Scottsdale developer who has been bullish about BTR in metro Phoenix just broke ground on a 246 unit BTR community in Peoria.
The Scottsdale-based Empire Group of Cos. has set a goal to start a BTR construction project each month in this year.
Lifestyle Homes has been selected as general contractor for the construction of Village at Pleasant River, a 25-acre development.
The community will have a gated entrance, a resort style pool, a fitness center and a lounge. Each home will have an open floor plan, a private yard with doggy-door access, smart-home technologies, a large bedroom closet, additional storage, and two parking spots. There will also be a dog wash and park, as well as walking paths, barbecues and fire pit areas.
Empire Group will build its second BTR community near Peoria at 115th Ave and Happy Valley Road.
Richard Felker said that the leasing will begin as soon as the new Taiwan Semiconductor Manufacturing Co. facility opens.
BTR Investor Interest also grows
Investors are also interested in these build-to-rent properties.
Keystone Homes, based in Scottsdale, sold its first BTR for $68.3 millions and has now four more projects in the pipeline with a total of $197 million development costs.
Encanto Waterfront is a 21-unit BTR luxury community located at 814 E. Roma Ave., Phoenix. It was sold this month for $10.32 million -- and the leasing hasn't begun yet.
Usually, these communities are sold after the occupancy is stabilized.
The seller was Metro 21 on Roma LLC, a Phoenix-based company. Northmarq's Phoenix Investment Sales Team, Trevor Koskovich and Ryan Boyle were there to represent the seller. BSK 340 LLC, based in Los Angeles, was the buyer.
The community will be built in 2023 and features units that range from 1,298 square feet to 1,378.
Boyle said that the property was vacant at the time of closing on April 10.
He said, "It's completely empty." "We closed immediately after the final certificate of occupancy had been issued."
TerraLane Communities of Scottsdale, which sold its BTR communities located in Phoenix and Goodyear for $185.9 millions to Inland Real Estate Acquisitions last summer, has expanded into the Texas market with plans to construct 94 rental units at El Paso.
TerraLane, TerraLane's co-founder and chief executive officer, Steve LaTerra said that the company has reached into new markets in western U.S. with a positive growth outlook.