Local rental market tightens, build-to-rent trend grows


TRI-CITIES, TN – Build to rent single-family community is not a new concept in the Tri-Cities, but it is gaining additional popularity. Several local builders and individuals have long had condo-townhome developments and single-family rentals for high-end business individuals cooked into their business plan.

One build-to-rent townhome development was recently completed in Kingsport, and another is in the works in Gray. This does not include the surge in large multi-family projects like the purchase and 72-unit expansion of the Retreat in Reserve in Kingsport by Bodka Creek Capital. But it parallels the national trend.

According to economists Elliot F. Eisenberg, “In 22Q4, for the first time since at least 1974 when data became available, the quarterly number of housing units built-for-rent at 133,000 exceeded the number of single-family units built-for-sale at 126,000. Historically, the only times these numbers came close were during the recessions of 1982 and 2008/09 when single-family production collapsed. Single-family built-for-sales starts are down about 40% from their recent peaks, built-for-rent activity is nearing its 1986 high.

Last year the National Home Builders Association advised its members to consider build-to-rent townhome products to compete with an explosion of large apartment complexes. The reasoning was to accommodate apartment dwellers who would prefer townhomes to apartments.

The competition seems to work. And although the occupancy rate and competition is up, the pace of rent increases seems to have waned. The most current local single-family rental occupancy rate has increased to a little over 98%. That’s down from the last report when both Tri-Cities metro areas had the second highest single-family occupancy rates in East Tennessee. Knoxville had the highest rate.

That’s a little better than the local apartment community occupancy rate, which is also among the highest in East Tennessee. According to the Tri-Cities Apartment Association, the most current count is about 97%. The about qualifier is used because not all the local apartment complexes and many of the smaller ones do not take part in the county.

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Categories: REAL ESTATE

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