Built-for-rent homes arrive in suburban Tampa Bay as industry booms

Florida has long been home to the suburban sprawl – the landscapes of nearly identical houses with emerald lawns are as typical of the state as its reptile-filled swamps.

But a new kind of suburb is developing around Tampa Bay: those with new homes only for rent.

Even though the housing market has an insatiable demand for homes for sale, a growing contingent of businesses are focusing on building built-in housing estates for rent for what they describe as an equally hungry clientele signing leases almost as quickly. that houses can be erected. .

The rental construction trend started in Arizona and after much success spread, with rental communities appearing in Denver and then Texas, said Brad Hunter, founder and president of Hunter Housing Economics, which advises developers and investors.

“It’s like a tidal wave that’s about to crash onto the beaches of Florida,” he said. “I see him strike suddenly this year.”

In Florida, Tampa Bay is a special hot spot. The industry is exploding so quickly that it’s hard to get solid numbers on built neighborhoods for rent, but Hunter tracks nearly 20 communities, many of which are still in their early stages of development, from Ruskin to Port Richey.

Statewide, about 600 units were developed for rent last year, according to West Palm Beach-based Hunter.

“This year it will be multiples of that, and in 2022 it will be much more,” he said.

Before the Great Recession, renting large-scale single-family homes was seen as an untested business model, with question marks as to whether it would be too expensive to manage dozens of scattered homes compared to multi-family complexes. dense apartments. But after the market collapsed and left a glut of homes for sale, now giant companies like Invitation Homes bought thousands of homes and rented them out to tenants, proving through their profit margins that the idea was. feasible.

When the housing market recovered and cheap homes became harder to find, the concept of building for rent was born. Hunter said the industry started around 2012, but the past five years have been the fastest growing industry.

“All the data from the industry proves that this is a very strong and reliable company,” said Meredith Delcamp, partner of the Shutts & Bowen offices in Tampa and Sarasota who works with the hospitality industry. rental of single family homes for years. “In the last couple of years, (built for rental) is all everyone will be talking about.”

Delcamp said the young industry is changing all the time – and lately the coronavirus pandemic and the hyper-competitive housing market have increased demand for rental housing.

With more people working or attending homeschooling, young families are looking to get out of apartments and get more space, she said.

In addition, buying houses has become more expensive. Florida is an attractive market for real estate developers to rent due to its influx of people with foreigners moving south, combined with the attractiveness of the market and low supply, she said.

“Currently, it is very difficult to buy a house. There is so much demand, ”said Delcamp. With rental homes, “you can still live in the community you want to live in … while the market stabilizes.”

Lately, even some homebuilding companies have expressed an interest in becoming homeowners as well, such as Miami-based Lennar and Toll Brothers, according to Delcamp. Renting new homes, with brand new roofs and appliances, also alleviates the typical maintenance issues and overhead costs associated with running many homes.

In the past, critics have accused the single-family rental industry of swallowing up too many homes that would otherwise be homes for first-time buyers, keeping more people in the rental market and preventing them from building generational wealth. Industry versus that their properties represent a small percentage of the total U.S. housing stock, and that single-family rentals allow families who could not otherwise afford a home to live in neighborhoods of their choosing, which often come with access to better schools.

Cheryl Howell, Director of Affordable Housing for Hillsborough County, previously said she was concerned that a rental company, Lafayette Real Estate, is buying homes in Tampa because they are clustered in parts of the city ​​that had more minority residents and higher poverty rates.

But the addition of built-for-rental housing developments, she said, is positive for the Tampa Bay housing market.

“We don’t just have an affordable housing problem, we have a housing supply problem, which adds to the bottom line of housing supply,” she said.

The fact that the communities built for rent are new homes in the suburbs of Tampa rather than converting existing homes into rental housing is “a huge difference,” Howell said. “They’re not taking these units off the market, so to speak, for a higher income group. This actually increases the number of units.

One of the more prominent upcoming communities in the Tampa Bay area is Avilla Suncoast, which is built and operated by NexMetro, a household name in the rental construction world as a company that has helped the creation of the concept.

The 152-unit community in Odessa is under construction and rental is expected to begin by the end of this year.

“Avilla Suncoast is our community of flag planters in the Tampa market,” said William Hulton, NexMetro vice president of development for Florida.

But there will be more: Besides Avilla Suncoast, NexMetro has about 1,200 homes slated for construction in Pasco, Hillsborough and Manatee counties, Hulton said.

While the homes are designed to take tenants out of the “big-box multi-family feel” with shared walls, he said, the amenities of NexMetro’s subdivisions are reminiscent of upscale apartment complexes, with a community pool and spa as well as a dog park. Tenants will also have their own garages and the company will take care of all maintenance.

While the industry as a whole caters to three groups of people – families who cannot afford to own, families who choose not to own, and retirees – Hulton said NexMetro tenants are mainly the last two groups.

“We have a strong demographic made up of wealthy young professionals, single or married,” he said. “Over the past decade, consumers have fundamentally changed their perceptions of the American Dream… For a growing number of people, that means choosing to rent rather than own.