Build-to-Rent Sector On An Explosive Growth

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Before we begin... a big thank you to this week's sponsor - RealMarkets

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Let’s get to it.

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"Given a 10% chance of a 100 times payoff, you should take that bet every time."

— Jeff Bezos

New Study Shows an Impressive Q1 for Retail link

• Nationwide retail visits in Q1 2024 increased by 6.1% during the week of March 25. The data indicates a robust recovery in retail sector traffic, showing a clear consumer return to brick-and-mortar stores.

• Discount and dollar stores, including Dollar General and Five Below, led the charge in retail performance. These stores saw consistent year-over-year growth almost every week of Q1, highlighting consumer preference for value during uncertain economic times.

• Grocery stores and value-oriented gyms also reported strong performances. Chains like Aldi experienced spikes in visits, especially around Easter, demonstrating resilience against adverse weather in January and consumer focus on wellness and budget-friendly options.

2023 Most Successful Year for Build-to-Rent Sector link

• The build-to-rent (BTR) sector experienced a record-breaking year in 2023, completing nearly 27,500 homes. This was a 75% increase from 2022 and triple the number from 2021.

• Major BTR activity is concentrated in Phoenix, Dallas, Atlanta, Austin, and Charlotte, highlighting a significant growth trend in these metropolitan areas. Phoenix led with 4,030 units, up 164% from the previous year.

• Looking forward, over 45,400 BTR homes are under construction as of 2024, primarily expected to be ready by 2025. The rapid expansion signifies a robust interest from both renters and investors, but a moderation in pace is anticipated in the coming years.

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Student Housing Demand Continues to Surge link

• Preleasing and rent growth are strong in student housing. As of March, 67.7% of beds at Yardi 200 schools were preleased, showing a 2.4% increase over last year. Average rent per bed reached an all-time high of $895, marking a 6% increase year-over-year.

• Top schools demonstrate significant demand. The University of Mississippi, Purdue University, and Appalachian State University had some of the highest preleasing rates, with figures like 99.4% at Mississippi. This reflects strong demand at certain universities despite broader market challenges.

• Projected increases in new inventory amidst high rent growth. Yardi Matrix projects that 46,285 beds will be delivered this year, which is a significant increase from 37,576 in 2023. The high delivery rate coincides with notable rent growth in many regions, underscoring a robust student housing market.

Luxury real estate prices hit an all-time record link

• The luxury real estate market is surging, contrasting sharply with a stagnant broader market. While overall real estate sales fell by 4%, luxury sales climbed more than 2% year-over-year.

• Wealthy buyers, less affected by high mortgage rates, often purchase with cash. Nearly half of all luxury homes were bought with cash this quarter, with some areas like Manhattan seeing cash purchases for 68% of sales.

• Prices in the luxury market soared, with median prices up nearly 9% to a record $1,225,000. This rate of increase is about twice that seen in the broader market, highlighting a significant divergence in market dynamics.

Now is a great time for brokerage acquisitions link

• Current economic uncertainty has dampened M&A activities, but RTC Consulting experts view this as an optimal time for brokerage acquisitions. Smaller firms, particularly one-office brokerage firms, are seen as prime candidates for acquisition in this climate.

• Scott Wright and Steve Murray from RTC Consulting suggest that acquiring small brokerages can be more efficient than recruiting individual agents. This approach allows acquiring firms to effectively and quickly boost their agent numbers and market presence.

• Despite facing headwinds like inflation and an unpredictable interest rate environment, there is a strong case for considering small acquisitions. Such strategic moves are anticipated to provide stability and growth opportunities for larger firms amidst ongoing market challenges.

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That's all, folks.

Cheers,

Vidit

P.S - Read past newsletters here