A joint venture between Austin-based development firm Good + West and a Dallas-based private equity fund is set to build four major projects in the Perch built-for-rent portfolio in the Dallas area.
While the financial terms deal, as well as the private fund partner, could not be disclosed, Good + West confirmed in a press release that it currently has a construction pipeline of more than $150,000,000, and intends to complete approximately $400,000,000 worth of developments in the Perch community over the next four years.
Perch is the main brand of Good + West that is being administered all across Texas, with this portfolio in particular initially surfacing in the Dallas-Fort Worth and Austin metro areas.
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According to the press release, the new partnership is intended to cater to each city’s increasingly high levels of migration, with Dallas-Fort Worth in particular ranking among the top cities in the nation people are looking to move to.
“Dallas has such an inflow of jobs that there’s certainly a housing shortage, and it’s really interesting because I feel like you draw people for BTR from people who maybe could afford to buy a house, but don’t really know if they want to stay there”, said Heather McClure, who led the team that advised Good + West on the partnership, in an interview with The Real Deal.
BFRs are a relatively new asset class that, while growing slowly, is popular among younger buying demographics. According to the release, it is estimated that 5-10 percent of all newly built homes are BFR, and in the DFW area especially, several companies are starting to invest in massive BFR projects to take advantage of the area’s steadily growing population.
Just last month, The Fort-Worth Zoning and Planning Commission approved a request by Continental Properties to build a 104-unit build-for-rent of single-family for-lease homes at the northeast corner of Lake Forest Drive and Collin McKinney Parkway, one of the most affluent and popular cities in North Texas.
Migration patterns accelerated by COVID-19 have greatly enhanced the popularity of this type of product, especially as more young couples, families with children, and retirees looking to rent single-family homes with upscale amenities for the long term.
A recent report shows that Dallas cities are among the top most searched cities in the nation for people to move to, and among the 20 cities in Texas with the highest in-and-out ratio of movers, 8 of them were in the DFW area alone.
“The demographic, it’s really interesting. It’s kind of a barbell because you do have some empty nesters that come into this space, but then you also have a lot of young families. And so this whole family formation that’s occurring right now, the BTR space is perfectly poised to provide good and affordable housing for them,” McClure said.
The reason the Perch portfolio initially broke ground in both the DFW and Austin metros was that both are experiencing this surge in population and introducing new, willing buyers into the market. It will mainly consist of multiple dedicated rental communities that will deliver best-in-class products and amenities.
The partnership is a co-GP venture structured by Maryland-based commercial company Walker & Dunlop, Inc., which advised Good + West in identifying a co-general partner that will both provide funds and support them as they develop the portfolio. It is expected to cater to the increased migration and growing workforce of each city.
According to the release, Austin’s “Silicon Hills” has seen a major influx of as large tech companies that are beginning to establish a presence in the area, meaning the region is perfect for the development of BFR as job growth continues to outpace housing supply.
“Good + West has more than 30 combined years of multifamily development, asset management, and finance experience. They are perfectly poised to deliver unique, well-designed projects that are perfectly suited to the BFR market,” McClure said in a statement.