‘Discretionary Renters’ Driving Growth of Build-for-Rent Communities
Commercial real estate agency Walker & Dunlop recently released its 2025 built-for-rent report, titled The Growth of Built-for-Rent, which includes a comprehensive look at current market trends, analysis, and potential advantages and challenges of the built-for-rent, or BFR, sector.
“BFR has emerged as a fast-growing and highly strategic segment within multifamily real estate,” said Walker Harris, senior vice president and co-head of multifamily at Walker & Dunlop. “Fueled by evolving renter preferences, constrained for-sale inventory, and widening affordability challenges in homeownership, BFR presents renters with a unique option: purpose-built single-family homes combined with the flexibility of renting.”
According to the report, demand for BFR is accelerating for multiple reasons, including:
- A shifting renter profile: Renters choose BFR for lifestyle and flexibility, enjoying home-like features without mortgage commitments.
- Supply-demand imbalance: Rental housing demand exceeds supply as population growth outpaces new single-family home construction.
- Affordability gap widens: Rising homeownership costs make buying less affordable, increasing interest in BFR communities.
- Rent vs. own: BFR renting often costs significantly less than owning a comparable home, offering notable savings.
Among its highlights, the report shows how the growth of “discretionary renters,” those who simply prefer to rent rather than own a home, has grown across all life stages. Millennials, however, may be driving the future demand of BFR as they are now the largest generation in the United States and face many hurdles, including student debt and high mortgage rates, toward homeownership.
Walker & Dunlop further suggests that, for owners and investors, BFR offers institutional-grade stability by combining single-family home appeal with multifamily management, leading to stable cash flow and higher occupancy rates around 96%, 200 basis points higher than the multifamily occupancy rate.
The sector’s diverse product types, such as detached homes, townhomes, and horizontal apartments, also may allow for tailored investment strategies, with single-family detached homes often commanding the highest prices as they most closely replicate the feel of traditional homeownership.
Built-for-rent has emerged as a popular strategy for many firms. Capital Square recently fully subscribed a BFR offering near Chattanooga; Pinnacle Partners and Trilogy Investment Company launched a BFR opportunity zone fund; and Inland Private Capital fully subscribed its $72 million BFR DST in Arizona. Last year, ADISA also featured an interview with Capital Square co-CEO Louis Rogers discussing the possible appeal of BFR.
Founded in 1937, Walker & Dunlop specializes in providing customized financing solutions to owners and operators of commercial real estate properties across the United States. The firm is the 10th largest mortgage servicer for commercial real estate loans in the nation, with a servicing portfolio that totaled $135.3 billion as of Dec. 31, 2024. The company also delivered a total transaction volume of $40 billion and generated total revenues of $1.1 billion in 2024.
This article is for informational purposes only and does not constitute investment advice, an offer, or a solicitation to buy or sell any securities or investment products. Readers should consult with a qualified financial adviser before making any investment decisions.
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