The build-to-rent sector (BTR) remains a complex landscape, where capital has been constrained and players continue to enter and exit the space. Understanding the shifts, trends, underlying demographic data, and headwinds can be paramount to finding success in the sector.
Jay Byce, president of ResiBuilt Homes; Kelli Lawrence, CEO of Onyx + East; Andrew Welker, CEO of Welker Properties; and Chris Matzke, director of development and construction for SVN | SFR Capital Management, will participate in a panel discussion during the Business Strategy Essentials: Navigating Today’s BTR Landscape session at Build-to-Rent from BUILDER parent company Zonda at the end of January in Dallas.
BUILDER spoke with Matzke to understand the dynamic landscape in the BTR sector as well as what to expect from the panel discussion at the event.
In your current role with SVN | SFR Capital Management, what are your responsibilities?
My role is the director of development and construction. I support our efforts on a national level to acquire self-contained BTR communities. These activities include finding opportunities, community selection, collaborating with builders and developers, and providing support to our team to help with the optimization of the BTR opportunity.
What shifts have you seen in the BTR space in your career and in recent years?
The reorientation of consumer priorities to find economic efficiencies driven by the consumer's ability to own versus the cost to rent, the drivers for new migration patterns across the United States and their impact, and the market adjustments necessary to achieve cap rates in each submarket.
What is challenging about navigating the BTR landscape in the current market?
- Interest rates and timing the next economic wave. Projecting the bottom, the next interest rate reductions, and building the correct backlog.
- The impact of equity and debt with stricter underwriting standards and higher costs.
- The lack of foresight in understanding where we need to go to be successful on the next level.
What opportunities do you see in the sector? Where do you see the sector going in the future?
- More builders and developers will enter the space and take on the BTR risk to stabilize absorptions and reduce land risk while creating better efficiencies to reduce costs.
- There are several BTR companies self-developing by providing the capital stack and underwriting to get a deal structure that should outperform the market.
- The industry itself needs to advance in regard to sophistication in technology and underwriting, understanding the residential differences regarding locations, product, community types, and the impact of amenities.
What can attendees expect to take away from the conversation at your panel session at the Build-to-Rent event?
- We are all still in a learning period. Each and every variable is an added value perceived by the tenant/customer, and it drives our net operating incomes.
- Land planning and product required for rental are the overlooked aspects to success—usually the difference between success and failure.
- Builders need to be more mindful that BTR can be more than an enhancement to their retail business and is a completely different stand-alone business to maximize their value.
