CHICAGO—Glittering new luxury apartment towers dot the urban cores of many US metro areas, but the suburban outskirts contain a lot of modest workforce housing that quietly generates solid returns. Redwood Capital Group, LLC, a Chicago-based multi-family investment firm, has become a big player in class B suburban properties, and the firm's leaders say that although it does not produce headlines, the niche has tremendous long-term potential.

Redwood recently closed two of these acquisitions totaling more than $101 million and encompassing 630 units. The properties, located in Westmont, IL and Raleigh, NC, were both acquired in June 2017. Headed by partners David Carlson and Mark Isaacson, Redwood now owns and operates approximately 35 apartment properties totaling 11,000 units valued at about $1.2 billion.

“Nobody is really talking about what is happening in the suburbs,” Carlson tells GlobeSt.com. “Only a small percentage of millennials will live in a downtown apartment. The majority will stay in the suburbs and form households.” And as experts believe that relatively few will buy homes, “that generation is dubbed 'Generation Rent.'”