Atlanta-based Blue River Development, LLC has expanded into Charlotte, North Carolina. Currently, two developments are in process with other options in the works for a total of 500 lots.
With more than 6,000 total lots in some form of due diligence, entitlements and construction across the Southeast, the Blue River Development team has more than 20 years of experience in acquiring and developing nearly $2 billion in residential, multifamily and retail projects.
“Charlotte will be our second home,” Managing Principal Brad Cooper said. “Charlotte currently has a population of 2.9 million in its MSA. It has grown 20% in the last 10 years and is expected to grow another 15% by 2030.”

“There are tremendous growth opportunities for builders and developers in the market,” Cooper said. “With massive job growth and infrastructure problems that have stalled the ability to build much-needed housing in the market, it has a lot of pent-up demand. Once the market starts moving forward, it will outpace Atlanta in terms of percentage of growth.”

Blue River Development Strategic Partner Michael Meshkaty and Land Acquisition Manager Chase Mallein will spearhead entry in Charlotte. Together they will tag team finding organic leads and tracking the market effectively.
Charlotte is the second-largest financial capital in the country with high income, millennial-driven growth. Lots of technology, distribution and financial jobs are available. It is a well-educated, well-rounded market for anyone who wants to live or work there, not to mention a good value.

Prices in Charlotte are not as inflated as other large markets on the West Coast and in the Northeast. The cost of living is more affordable, and homebuyers get a better value for their money, which has been one of the primary drivers of growth in Charlotte.

“There are lots of first-time and move-up buyers in the area. Basically, you can head in any direction in Charlotte and hit an established or a growing market,” Cooper comments. “Millennials just starting to buy homes and will continue for next 10 years, especially along the burgeoning I-85 corridor.”

“We are very optimistic about the growth in Charlotte. “We will make sure we do our part to create much-needed value in single-family and multifamily real estate development” Meshkaty said. “We are looking for land and opportunities within 40 miles in any direction from the center of the city.

Blue River Development will focus on multiple development corridors including the I-85 corridor from Kings Mountain, Gastonia and Belmont through to Harrisburg, Concord, Kannapolis, China Grove and Salisbury; the I-77 corridor from Rock Hill, Indian Land and Fort Mil up to Huntersville, Lake Norman, Mooresville, Troutman and Stateville, the Hwy 321 corridor from York and Clover to Dallas, Lincolnton, Newton and Hickory; and the Hwy 16 corridor from Midland to Albermarle. These areas are well established or on the path of growth and have a long runway.

The Blue River Development team has more than 20 years of experience in developing and acquiring nearly $2 billion in residential, multifamily and retail projects. The firm’s achievements are driven by its ability to provide and catalog the most up-to-date market intel, the ability to execute on that data and its accountability to clients and investors.
 

Investors are snapping up lots to build an empire of suburban rental homes. 

For the U.S., the housing shortage is a crisis. For Wall Street, it’s a land rush. Institutional investors from JPMorgan Chase & Co. and Morgan Stanley to the Arizona State Retirement System are pouring billions into their next big housing bet: building communities of single-family homes in the suburbs for renters getting priced out of homeownership. Finding tenants is the easy part, as millennials with children, dogs and the need for remote-work space outgrow the confines of apartment living. But to succeed, landlords and their backers have to outcompete homebuilders for labor, materials and, most of all, land. That’s contributing to skyward costs that are rippling through the market — meaning prices for newly built homes may climb even further out of reach for would-be buyers.

Single-family landlords, builders, apartment companies and institutional backers have committed $85 billion for build-for-rent projects, enough to develop 315,000 houses, according to Alan Ratner, an analyst at housing research firm Zelman & Associates. Only about 20% of the money has been spent and it’s already pushing up lot prices, he said. Two-thirds of land sellers surveyed by the firm late last year said for-sale builders are now going toe-to-toe with rental investors.

“You’ve got this new industry that’s cropped up overnight, backed by Wall Street,” Ratner said. “Very quickly the capital raised is competitive with the homebuilder universe.”

The shift to new construction is the next step in Wall Street’s bet that the American Dream will tilt more toward rentership. A decade ago, private equity firms helped stabilize housing in the wake of the financial crisis by scooping up foreclosures at fire-sale discounts and renting them to former homeowners with bad credit, an industry that rapidly grew and broadened in scope.
But now home listings are disappearing fast, prices are soaring and many investors prefer building rental communities from scratch over the inefficient process of buying existing houses, one by one, one bidding war to the next. Grouping houses closer together also makes them easier to manage, eliminating the need to deploy workers to single-family homes scattered across a wide geography.
“Investors are buying everything from finished homes to entitled land and anything you can imagine to get scale,” said Margaret Whelan, chief executive officer of Whelan Advisory Capital Markets, a boutique investment bank focused on homebuilders. See also: JPMorgan Property Fund Reaches Deal to Develop New Rental Homes
The business is so appealing that traditional homebuilders are diving in themselves. Lennar Corp. has teamed up with Centerbridge Partners and Allianz Real Estate to commit $4 billion to build and acquire purpose-built rentals. PulteGroup Inc., meanwhile, inked a deal to develop 7,500 houses for Invitation Homes Inc., the biggest single-family landlord in the U.S.
That means resources are getting diverted from the production of for-sale houses while at the same time helping to alleviate the rental shortage.
The effects are being seen in Sun Belt areas, where investors are most heavily concentrated, said T.A. “Kip” Hyde Jr., chief financial officer of Reeder Capital Partners, a Dallas-based family office with a land-development division that got a $100 million credit facility from Fortress Investment Group. He recently made an offer for a parcel in North Carolina for a homebuilder customer, only to see a build-for-rent company come in with an unsolicited bid of about 15% more.
“We have to go over this with the homebuilder with revised models and ask, ‘At what price are you out?’” Hyde said. “It’s inflationary — it translates into an increase in the home price for the end user.”

Deals Accelerate
The build-for-rent market is small so far, with 14,000 houses under construction nationwide, according to data from listing service RentCafe. But it’s growing fast: Nationally, about 6% of finished lots purchased in the fourth quarter were for rental-house projects, up from 3% a year earlier, data from John Burns Real Estate Consulting show. In the Southeast, which includes hot spots in the Carolinas, Tennessee and Georgia, the share was 14%. The price of lots across the country jumped 17% in the fourth quarter, more than double the annual pace of growth two years earlier. Until the second half of last year, it wasn’t penciling out for single-family rental companies to pay a premium for lots, said Greg Vogel, chief executive officer of Land Advisors Organization in Scottsdale, Arizona, which brokered $4.4 billion in land transactions in 2021. Then rental demand went through the roof, fueled by pandemic moves and soaring prices in the for-sale market.
Rents for U.S. single-family homes jumped by a record 12% in November, three times the annual growth pace a year earlier, according to data from CoreLogic. They surged 33% in Miami and almost 20% in Phoenix.
“This is just math and the math is beginning to prove they can pay more,” Vogel said. Read more: Housing Hunt Turns to Desperation With Record Rise in U.S. Rents
Mark Wolf, a pioneer in the build-for-rent business who founded his now San Antonio, Texas-based AHV Communities in 2013, said the big-money newcomers are making aggressive bids. Their cottage-style projects, in particular, squeeze more homes onto the same acreage, allowing them to pay more for land.
It’s a mistake to discount the risk of a future rent pullback, Wolf said.
“They’re putting these homes 30 or 40 minutes outside town,” he said. “It’s irrational exuberance to assume if you build it, they will rent it.”
Jordan Kavana, CEO of rental company Transcendent Electra, said firms like his can approach land acquisition differently than for-sale builders. It takes time to complete communities of homes, which the company plans to own and operate for years. So it’s better to stockpile land before it goes even higher. Earlier this month, his firm reached a $1.25 billion deal to acquire lots in Florida, Georgia and North Carolina.  “It’s a land-constrained market and we’ve seen values go up,” Kavana said. “We may be able to pay more, because we’re long-term holders.”
Investors betting on rentals have another reason to be bullish: The Federal Reserve’s march to raise interest rates may squeeze already-pinched homebuyers and stall the for-sale market.
“As mortgage rates rise over the next year, the monthly payment will go meaningfully higher, pricing more young families out of homeownership,” said Brad Hunter, a housing economist who advises large-scale developers on land purchases. “And the option of renting a brand-new single-family home in a professionally managed, cohesive subdivision will become that much more attractive.”

Anyone searching for a home today knows full well the pickings are slim. The supply of U.S. homes for sale is near a record low, and the gap between supply and demand is widening.
The U.S. is short 5.24 million homes, an increase of 1.4 million from the 2019 gap of 3.84 million, according to new research from Realtor.com.
The U.S. Census found that 12.3 million American households were formed from January 2012 to June 2021, but just 7 million new single-family homes were built during that time. Single-family home construction has suffered from a severe labor shortage that began well before the pandemic but was then exacerbated by it. Supply chain disruptions in the past year have pushed prices for building materials higher, and as pandemic-induced demand soared, prices for land increased as well.

While new household formation is actually slower than it was before the pandemic, homebuilders would have to double their recent new home production pace to close the gap in five to six years. A new household can be either owner-occupied or rented.
“The pandemic has certainly exacerbated the U.S. housing shortage, but data shows household formations outpaced new construction long before Covid. Put simply, new construction supply hasn’t been meeting demand over the last five years,” said Realtor.com chief economist Danielle Hale. “Millennials, many of whom are now in their 30s and even 40s, have debunked the industry’s ‘renter generation’ expectations.”
Household formation is when an individual moves out of a shared living situation.
Single-family home construction has been rising steadily since it bottomed in 2009 during the Great Recession. It is still not as high as it was just before the housing boom and is actually running at the slowest pace since 1995, according to the U.S. Census. The slower pace comes as the largest generation enters its typical homebuying years.
PulteGroup, one of the nation’s largest homebuilders, just lowered its Q3 and full-year guidance for home closings, citing supply chain disruptions.
“Despite the extraordinary efforts of our trade partners, the supply chain issues that have plagued the industry throughout the pandemic have increased during the second half of the year,” Pulte CEO Ryan Marshall said in a release. “We continue to work closely with our suppliers, but shortages for a variety of building products, combined with increased production volumes across the homebuilding industry, are directly impacting our ability to get homes closed to our level of quality over the remainder of 2021.”
Other builders are citing the same issues. Some, including Pulte, have said they are slowing sales themselves in order to keep up with their backlog of demand. As a result, stocks of the builders have been trading significantly lower over the past week.
Due to the shortage, prices for new and existing homes are rising at a record pace. For new construction, which has always come at a price premium, homes with a median value of $300,000, which is considered relatively affordable, represented 32% of builder sales in the first half of 2021, down from 43% during the same period in 2018.
Builders simply can’t afford to produce cheaper homes, given their rising costs.
“No matter how you frame the scenario, it will take a more meaningful shift in the pipeline to meet demand in the foreseeable future,” Hale said.