John Burns, CEO of John Burns Real Estate Consulting, remains “crazy bullish” on the single-family rental/build-for-rent (SFR/BFR) sector despite current economic challenges facing commercial real estate. During a Berkadia webinar on April 5th covering the SFR/BFR sector, he enumerated both tailwinds and headwinds for this industry.
Economic growth and housing demand are in its favor; however mitigating against it are the economic outlook and financing feasibility. Although we’re not yet in a recession, it is coming due to excessive debt from fixed-rate or floating rate debt leading to defaults according to Burns. Development continues with some of the leading developers in for sale single family market taking part as well as institutional investors showing an increasing interest in SFR/BDR space over recent years though still few players involved compared to other sectors within CRE.
When asked about whether there will be an acceleration or deceleration of demand as multifamily renters move into SFR/BDR during this time period -Burns predicted that newly built BDR properties will take some demand from apartments but most likely come from people who have rented older SFRS previously or even owned their own homes before now looking at BDR options instead due to attractive offerings available across markets today.. Future supply was identified by him when questioned about overlooked risks when underwriting these properties which includes homes currently occupied by homeowners turning out also being rentals along with homebuilders product hitting for sale market unexpectedly too .
Turmoil within financial markets has caused many potential investors hit pause but waiting until spring leasing season looks steady may be best advice here given Silicon Valley Bank collapse last month making lending only tighter going forward according Banks not becoming competitive amongst each other during crisis times either . Mixed use & affordable product can also be added onto BDFR projects segmenting rentals better & faster while amenities tenants want most include garages & yards rather than those expected usually found at apartment complexes per Burn’s observations based off his firm’s resale agent survey findings recently too
