Build-to-Rent Sector Gains Traction Amidst Market Reset

By RadCRE Research · 2026-09-26 · Industry Insights

JPMorgan Asset Management highlights build-to-rent (BTR) housing as a key sector for returns, as 73% of BTR residents plan longer stays [1, 6].

Investor Focus Shifts to Current Income and Durable Demand

The commercial real estate (CRE) landscape is undergoing a significant recalibration, with property values reportedly falling over 20% as interest rates have climbed from near zero to above 5% [1]. In this environment, where investors can no longer rely on declining rates to buoy property values, institutional players are re-evaluating strategies. JPMorgan Asset Management, for instance, is now emphasizing real estate debt, net-lease properties, and build-to-rent (BTR) housing as sectors capable of delivering strong returns. This strategy underscores a focus on current income, disciplined pricing, and assets supported by resilient demand [1].

Build-to-Rent Sector's Fundamental Strengths

The BTR segment, specifically, is demonstrating fundamental strengths that align with this investor shift. A recent survey by John Burns Research and Consulting's New Home Trends Institute indicates a significant increase in resident retention. Seventy-three percent of BTR residents now anticipate remaining in their current homes for at least three years, a notable rise from 58% in 2024. Conversely, the proportion expecting to leave within one or two years has decreased from 41% to 27% [6]. This trend towards longer resident stays offers tangible benefits for operators, including reduced unit turns, lower vacancies, and decreased leasing expenses, all of which contribute to improved financial performance [6].

The appeal of BTR communities is further amplified by broader demographic and economic factors. Cities like Glendale are experiencing robust population growth and diversifying economies, particularly in healthcare and manufacturing, alongside limited new housing development. These conditions create a strong foundation for sustained rental demand, as seen in properties like Glenn Isle, a 22-unit single-story garden-style multifamily community in south Glendale that was extensively renovated and repositioned in 2025 [2]. Such communities offer premium finishes and amenities, catering to modern renter preferences [2].

Evolving Demand Dynamics and Underwriting Considerations

However, the housing market presents nuanced challenges that require careful underwriting. While traditional demand forecasts rely on population growth, job creation, and new supply, an additional critical factor is emerging: the share of young adults residing with their parents [3]. Ivy Zelman, executive vice president and co-founder of Zelman (a Walker & Dunlop company), highlights that even a modest 100-basis-point change in the percentage of Americans aged 20 to 39 living at home can translate to an annualized change of approximately 500,000 households [3]. This dynamic suggests that shifts in household formation patterns can profoundly and swiftly impact housing demand for apartment owners, homebuilders, and BTR developers alike [3].

RadCRE Perspective

“The current CRE environment, marked by higher interest rates and a reset in property values, necessitates a strategic re-evaluation for investors. Our focus at RadCRE aligns with institutional insights that highlight sectors with intrinsic demand and resilient income streams. Build-to-rent housing stands out, not just for its operational efficiencies driven by longer resident tenures, but also for its ability to meet evolving demographic needs. While the macroeconomic landscape, including rising Treasury yields and the stickiness of young adults at home, presents complexities, these challenges also create opportunities for value-add acquisitions and financing strategies in well-located and well-managed BTR assets. Diligent underwriting and an understanding of localized demand drivers are paramount to success in this market.” — Majid Radaei, Founder & Principal Broker, RAD Commercial Realty

The broader economic environment, characterized by the 10-year Treasury yield moving above 5%—and even entering discussions of 6%—poses a significant question for CRE investors regarding its implications for commercial mortgage pricing, property values, and capital availability [5]. Despite these headwinds, the BTR sector's ability to generate stable income through durable demand makes it a compelling focus for firms like RadCRE. We advise clients on navigating these market dynamics, focusing on robust underwriting and identifying strategic opportunities within resilient asset classes like build-to-rent.

Tags: Build-to-Rent, BTR Investment, Multifamily Demand, CRE Investment, JPMorgan CRE