A development team has a $2.5 billion plan to lure millennials — and some Gen Xers — out of amenity-filled apartments and into thousands of new houses across the country.
Miami-based Global City Development and Brazil-based Leste investment management firm want to construct 10,000 new houses and townhomes in the build-to-rent space, The Real Deal has learned.
The plan is on an aggressive timeline, with the venture aiming to build the houses in 30 communities over the next five to seven years.
Those communities will be under the Cassa Life brand, and will be geared toward renters between 25 and 44. Many of them are currently living in high-rise buildings in their cities’ downtowns, paying high rents for small spaces, said Brian Pearl, principal of Global City Development.
The target resident wants to move away from micro and co-living product, and is not looking to buy a home, either because they prefer renting or they’re priced out of the homebuying market.
At Cassa Life communities, residents would be paying the same or less in rent for double the space. “As people get married or get pets, have children … there’s a lot of life events where people need more space,” Pearl said. “The problem with urban living today is a lot of units are getting smaller and smaller.”
The venture has made its first two land buys, shelling out $15.2 million for 300 acres in Raleigh and Durham, North Carolina, where it’s planning to build more than 700 units, and has started acquiring land in Nashville, Tennessee, for a project with about 200 units. Pearl said the partnership bought a smaller property in the Nashville area for $2 million, and is still assembling land for that community. Construction on the Raleigh/Durham project will begin next year.
In Florida, the group is negotiating deals for land in Tampa and Orlando, and looking at properties in western Palm Beach County.
Unlike one-off homes that investors rent out or large, sprawling portfolios owned by single-family rental giants like Blackstone, Cassa Life will build and manage entire communities from scratch.
Global City is managing the venture, and Leste is providing the capital. Leste, led by founder and CEO Emmanuel Hermann, has an office in Miami. The two firms have worked together in the past, Pearl said.
They are planning to expand to gateway markets in the Southeast, Texas and in Washington, D.C. Cassa Life is being led by Adam Adler, who previously worked for Terra. Pearl said the build-to-rent initiative is in response to how much land prices have increased.
He said the concept would not be feasible in markets like New York, San Francisco and Miami where land just outside of the urban core is either not available or too expensive.
“We’re trying to keep rents relevant for people making between $75,000 to $150,000 a year. The only way to really do that is to find markets where you can find the land,” Pearl added.
The communities will range from 200 to 500 townhouses and homes, with units ranging from 1,200 square feet to 2,000 square feet. The homes will have 10-foot ceilings, kitchen islands, and stainless steel appliances, for example. There will also be pools and fitness centers.
And of course, amenities will be a big focus. Younger people have become used to perks like speedy WiFi, so much so that Pearl said he’s looking to purchase land with fiber-optic cable.
“Speed of WiFi is becoming a key amenity because everybody is just streaming all the time. You just have to think about the future. It’s just going to get more and more intense,” Pearl said.