Crescent Communities Launches BFR Initiative Targeting High-Growth Cities Across South

Crescent Communities will launch a build-for-rent platform led by a former senior executive at Atlanta-based FirstKey Homes. 

The move marks Crescent’s initial expansion into the single-family, build-to-rent business, which has been booming this year as investors follow new migration patterns wrought by the COVID-19 crisis and homeownership continues to elude many would-be buyers across growth markets in the US. Crescent’s BFR initial strategy centers around four major cities—Atlanta, Charlotte, Charleston, and Raleigh—and each community will consist of up to 200 residences, with a combination of three- and four-bedroom townhomes and/or detached single family houses.

Tony Chen will lead the new initiative and joined Crescent as a Managing Director this week, the company said in a statement. Chen most recently served as Vice President, Chief of Staff, and Head of Office of Strategic Initiatives at FirstKey Homes, and his career also includes stints at Deloitte and Bank of America Merrill Lynch. He will report to Crescent’s President and COO Brian Natwick. 

The company’s BFR foray will benefit—and likely scale—from its affiliate relationship with homebuilders in the Sumitomo Forestry portfolio, which operate across the U.S. and collectively build over 10,000 homes annually. 

Institutional investors are flooding the SFR and BFR markets, which are expected to eclipse multifamily, office, retail, storage, and hospitality growth by next year, according to a new report from Walker & Dunlop. In the past, SFR and BFR were dominated by individual or small-scale investors, but the Great Financial Crisis and COVID-19 reversed that trend. And as demand has grown in secondary cities, institutional capital has followed. Walker & Dunlop values the overall SFR at around $3.4 trillion, and an estimated 5 to 10% of all new builds are BFRs.

“BFR is a relatively new concept among SFR investors, national homebuilders, and developers,” the Walker & Dunlop report states. “It has become increasingly popular to investors in recent years, including traditional multifamily developers. While the BFR market only makes up about 5 percent of new homes built, it is rapidly growing and will continue to do so as new entrants begin BFR operations.”