The Rise of Build-to-Rent: BTR Supply Market Analysis
Executive Summary
This report analyzes Build-to-Rent (BTR) supply trends across seven key U.S. markets and nationally, built using data from the Parcl Labs API. It offers insights into market growth, delivery patterns, vacancy rates, and new construction rental conversion rates.
Key Findings:
- National Trends:
- U.S. BTR supply increased 55% from 36,513 units (Q1 2023) to 56,667 units (Q2 2024)
- National vacancy rates improved from 13.3% (Q1 2023) to 8.8% (Q2 2024)
- New construction conversion to BTR rose from 1.1% (Jan 2020) to 5.4% (Jan 2024)
- Market-Specific Insights (Q1 2023 to Q2 2024 unless otherwise noted):
- Dallas: Largest market with 2,687 units (Q2 2024); 45% growth; vacancy improved from 19.4% to 11.8%
- Charlotte: Fastest growth at 82% (623 to 1,134 units); volatile vacancy (15.9% to 12.9%)
- Austin: Highest conversion rate increase from 3.0% (Jan 2020) to 15.8% (Jan 2024)
- Phoenix: Most improved vacancy, from 12.9% to 9.0%; 54% supply growth
- Market Indicators:
- Steady growth, improving absorption: Dallas, Houston
- High growth, volatile vacancy rates: Charlotte, Tampa
- High rental conversion rates, stabilizing vacancy: Austin, Phoenix
This analysis utilizes Parcl Labs' BTR methodology, synthesizing 5,000+ data sources for real-time BTR insights. The findings reveal a rapidly evolving BTR sector with significant regional variations, underscoring the need for market-specific strategies in development and investment.
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Background
The Build-to-Rent (BTR) sector faces a critical data challenge. Despite surging growth and investment, the industry relies on lagged, fragmented, and opaque information. This gap leads to significant capital deployment with limited market visibility. Case in point: Austin's 2024 market, where flawed assumptions have left builders, investors, and operators vulnerable.
Parcl Labs addresses this challenge through a Big Data and data science-driven approach. By synthesizing over 5,000 sources, we track BTR units in real-time. Our definition—newly constructed single-family homes observable as rentals shortly after completion—provides insights into actual BTR supply based on real-world activity.
This report analyzes U.S. national trends and seven key institutional markets (Atlanta, Austin, Charlotte, Dallas, Houston, Phoenix, Tampa), offering market metrics, SFR unit mapping, and granular data snapshots. Our unique perspective equips investors and operators with timely, accurate information to navigate this maturing sector effectively.
This analysis is part of our ongoing BTR series. If you're interested in accessing the full report, which includes additional metrics and deeper insights, please email team@parcllabs.com.
How are BTR supply trends evolving nationally?
The U.S. BTR market demonstrates growth, with total supply increasing from 36,513 units in Q1 2023 to 56,667 units in Q2 2024, representing a 55% increase over 15 months. Quarterly deliveries at the national level ranged from 2,761 to 5,074 units, averaging around 4,500 units per quarter. Vacancy rates showed improvement over the period, decreasing from 13.3% in Q1 2023 to 8.8% in Q2 2024.
The percentage of new construction converted to rental within 6 months of sale increased from 1.1% in January 2020 to 5.4% in January 2024. This 4.3 percentage point increase over four years illustrates the growing prominence of the BTR strategy in the U.S. housing market.
These national figures serve as important reference points for assessing the performance of individual markets, allowing us to identify which areas are outperforming or lagging behind the national trends.
How are BTR supply trends evolving in Atlanta?
Atlanta's BTR market’s total supply increased from 845 units in Q1 2023 to 1,285 units in Q2 2024, representing a 52% increase. This growth rate is comparable to the national average of 55%, but lags behind faster-growing markets like Austin and Charlotte.
Quarterly deliveries in Atlanta ranged from 57 to 133 units, lower than larger markets such as Dallas and Houston. This suggests a more measured pace of development in Atlanta compared to some other Sun Belt cities.
Vacancy rates in Atlanta fluctuated between 8.2% and 13.3%, ending at 9.1% in Q2 2024. While this represents an improvement, Atlanta's vacancy rate remains higher than Phoenix (9.0%) and the national average (8.8%), but lower than Austin (12.0%) and Tampa (12.9%) in Q2 2024.
The percentage of new construction converted to rental within 6 months of sale in Atlanta rose from 1.7% in January 2020 to 6.0% in January 2024. This 4.3 percentage point increase is in line with the national trend, but falls short of the dramatic increases seen in Austin (12.8 percentage points) and Charlotte (9.8 percentage points).
Overall, Atlanta's BTR market demonstrates growth consistent with national patterns, positioning it in the middle of the pack among the analyzed markets. It shows steadier growth than some markets but hasn't experienced the explosive expansion seen in cities like Austin or Charlotte.
How are BTR supply trends evolving in Austin?
Austin's BTR market’s total supply surged from 1,824 units in Q1 2023 to 2,263 units in Q2 2024, marking a 24% increase. While this growth rate is lower than the national average of 55%, it's important to note that Austin started from a higher base, indicating earlier adoption of the BTR strategy (in the analysis timeframe).
Quarterly deliveries in Austin varied, ranging from 57 to 271 units. Despite the fluctuations, Austin's delivery volumes often surpassed those of Atlanta and Charlotte.
Vacancy rates in Austin showed a slight decrease, starting at 13.0% in Q1 2023 and ending at 12.0% in Q2 2024.
The conversion rate of new construction to rental increased dramatically from 3.0% in January 2020 to 15.8% in January 2024. This 12.8 percentage point increase is the highest among all analyzed markets, far outpacing the national increase of 4.3 percentage points. It underscores Austin's position as a leader in BTR strategy adoption.
Austin's BTR market stands out for its high conversion rate and substantial existing supply, despite more moderate recent growth. These factors, combined with higher vacancy rates, suggest a maturing market that may be approaching saturation more quickly than its peers.
How are BTR supply trends evolving in Charlotte?
Charlotte's BTR market exhibits robust growth, with total supply nearly doubling from 623 units in Q1 2023 to 1,134 units in Q2 2024, representing an 82% increase. This growth rate significantly outpaces the national average of 55% and positions Charlotte as one of the fastest-growing BTR markets among those analyzed.
Quarterly deliveries in Charlotte ranged from 72 to 137 units. While these figures are lower than larger markets like Dallas or Houston, they represent a substantial and consistent influx of new units relative to Charlotte's market size.
Vacancy rates in Charlotte were notably volatile, starting at 15.9% in Q1 2023, dropping to as low as 9.3%, and rising to 12.9% by Q2 2024. This volatility contrasts with the steadier trends seen in markets like Phoenix or Houston and suggests a market still finding its equilibrium.
The conversion rate of new construction to rental in Charlotte increased significantly from 1.2% in January 2020 to 11.0% in January 2024. This 9.8 percentage point increase is the third-highest among analyzed markets, behind Austin and Houston, and more than double the national increase of 4.3 percentage points.
Charlotte's BTR market is characterized by rapid growth and high conversion rates, indicating strong adoption of the BTR strategy. However, the volatility in vacancy rates suggests the market is still maturing and may face absorption challenges if it continues to expand rapidly.
How are BTR supply trends evolving in Dallas?
Dallas leads in total BTR supply among the analyzed markets, with growth from 1,849 units in Q1 2023 to 2,687 units in Q2 2024, representing a 45% increase. While this growth rate is slightly below the national average of 55%, Dallas maintains its position as the largest BTR market in the study.
Quarterly deliveries in Dallas ranged from 138 to 220 units, consistently higher than most other markets analyzed. This steady influx of new units underscores Dallas's role as a key center for BTR development.
Vacancy rates in Dallas showed significant improvement, decreasing from 19.4% in Q1 2023 to 11.8% in Q2 2024. While this final vacancy rate is still higher than the national average of 8.8%, the substantial improvement suggests increasing market efficiency in absorbing new BTR units.
The conversion rate of new construction to rental in Dallas increased from 1.1% in January 2020 to 9.4% in January 2024. This 8.3 percentage point increase is above the national average of 4.3 percentage points, but lower than the dramatic increases seen in Austin and Charlotte.
Dallas's BTR market is characterized by its large scale and improving market dynamics. The combination of high supply, consistent deliveries, and improving vacancy rates positions Dallas as a mature and evolving BTR market.
How are BTR supply trends evolving in Houston?
Houston's BTR market’s total supply increased from 1,547 units in Q1 2023 to 2,208 units in Q2 2024, representing a 43% increase. While this growth rate is below the national average of 55%, Houston maintains its position as one of the larger BTR markets among those analyzed.
Quarterly deliveries in Houston ranged from 111 to 147 units, showing more consistency than markets like Austin or Charlotte.
Vacancy rates in Houston showed overall improvement, starting at 15.4% in Q1 2023 and ending at 10.4% in Q2 2024. While this final rate is higher than the national average of 8.8%, the trend indicates increasing efficiency in absorbing new BTR units, outperforming markets like Austin and Tampa in this regard.
The conversion rate of new construction to rental in Houston rose from 1.5% in January 2020 to 11.6% in January 2024. This 10.1 percentage point increase is the second-highest among analyzed markets, behind only Austin, and well above the national increase of 4.3 percentage points.
Houston's BTR market is characterized by steady growth, consistent deliveries, and a high conversion rate. The improving vacancy rates coupled with the strong adoption of the BTR strategy suggest a market that is scaling while maintaining stability.
How are BTR supply trends evolving in Phoenix?
Phoenix's BTR market’s total supply increased from 1,348 units in Q1 2023 to 2,077 units in Q2 2024, representing a 54% increase. This growth rate closely aligns with the national average of 55%.
Quarterly deliveries in Phoenix ranged from 121 to 186 units, showing more consistency than markets like Austin or Charlotte. This steady pace of new unit introduction, similar to Houston, suggests a stable development environment in Phoenix's BTR sector.
Vacancy rates in Phoenix improved notably, decreasing from 12.9% in Q1 2023 to 9.0% in Q2 2024. This final rate is only slightly higher than the national average of 8.8%, and the improving trend outperforms markets like Austin, Charlotte, and Tampa, indicating efficient absorption of new BTR units.
The conversion rate of new construction to rental in Phoenix increased from 1.7% in January 2020 to 9.7% in January 2024. This 8.0 percentage point increase is above the national average of 4.3 percentage points, but lower than the dramatic increases seen in Austin and Houston. It places Phoenix in the middle of the pack for BTR strategy adoption among the analyzed markets.
Phoenix's BTR market is characterized by consistent growth, steady deliveries, and improving vacancy rates.
How are BTR supply trends evolving in Tampa?
Tampa's BTR market’s total supply increased from 768 units in Q1 2023 to 1,175 units in Q2 2024, representing a 53% increase. This growth rate aligns closely with the national average of 55%, indicating that Tampa is keeping pace with broader BTR market trends.
Quarterly deliveries in Tampa ranged from 63 to 144 units, demonstrating more variability than markets like Houston or Phoenix.
Vacancy rates in Tampa were notably volatile, starting at a high of 21.7% in Q1 2023, improving significantly to 9.3% by Q4 2023, then rising to 12.9% in Q2 2024. This volatility contrasts with the steadier trends seen in markets like Phoenix or Houston and suggests a market still finding its equilibrium. Tampa's final vacancy rate is higher than the national average of 8.8% and most other analyzed markets, indicating potential challenges in absorption.
The conversion rate of new construction to rental in Tampa increased from 1.6% in January 2020 to 8.2% in January 2024. This 6.6 percentage point increase is above the national average of 4.3 percentage points, but lower than the dramatic increases seen in Austin, Houston, and Charlotte. It places Tampa in the lower half of the analyzed markets for BTR strategy adoption.
Tampa's BTR market is characterized by growth that matches national trends, but with more volatility in both deliveries and vacancy rates. The increasing conversion rate suggests growing adoption of the BTR strategy, but the market may be facing challenges in stabilizing occupancy levels as it expands.
Appendix - Methodology
BUILD TO RENT INDEXING METHODOLOGY
Our build-to-rent methodology relies on observable events occurring within the housing market. We look for new construction units that are rented within 6 months of being built, starting in the year 2020. A unit can fall out of measurement if it's sold to a new owner and doesn't reappear on the rental market within 6 months of the subsequent sale.There is much confusion around the definition of build to rent. Many methods rely on surveys, which covers a small subset of the overall housing market, are prone to biases, and don't have a clean reconciliation method. The issue with build to rent is that they are not static. Unlike commercial multifamily which can only serve one purpose, these are residential units that can be rented or sold. This requires better, more complete data to ensure an accurate pulse on what's occurring within the housing market.
RENTAL INDEXING METHODOLOGY
Our methodology for all rental units combines both on market and observed portfolio behaviors. When a unit is purchased by a portfolio consisting of rentals, we annotate this unit as being used as a rental unit. For example, say we have a mom and pop operator in Austin, Texas who owns 8 units. We have observed these units participate in the rental market. This operator buys a 9th unit. We will immediately annotate this 9th unit as a rental given the characteristics of the overall portfolio. This allows us to accommodate for situations where mom and pops fill units via personal relationships, never observing the rental on market.
VACANCY METHODOLOGY
Given the previously referenced indexing methods for both build to rent and total rental units, vacancy rate calculations are simply the number of units observed on the rental market divided by the total number of units annotated as rental units or build to rent units. Market vacancy rate includes both BTR and scattered site units.RENTAL PRICE PER SQUARE FOOTRental price per square foot is calculated by taking the interior square footage of a unit divided by the asking rental price by rental type.
MARKET DEFINITION METHODOLOGY
Except for the United States, which covers all 50 states, markets are referring to the metropolitan statistical areas (MSA). We use Census defined MSA geometry boundary files. If a unit's geocoding information falls within this boundary, we include it in that market. Our unit data includes latitude and longitude geocoding information to give flexibility in defining different market criteria for various metrics.
FINAL REMARKSThe included metrics in this report are a snapshot of what's possible quickly with our unit level data, however they are one perspective. You may have many other perspectives on how to articulate insights regarding the housing market.We spent years developing a multi-source, geospatial indexing technology to create a unified view of every residential unit in the country, tying together disparate rental, listing and sales data into one clean, timestamped and chronologically ordered sequence of events occurring around that unit. Today, we accumulate data from over 5,000 sources and the rate of source data integration is accelerating. Given the recent volatility in housing market litigation, housing data will likely become more fragmented. It's imperative to have better information to make more intelligent decisions.
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