Crescent Communities, Pretium Form $1B SFR JV

Crescent Communities and Pretium have formed a joint venture to invest in single-family build-to-rent homes in the Sunbelt region. The partnership will invest $1 billion and develop more than 3,000 new rental communities in the region under a brand called Harmon.

The joint venture has already completed its first investment, Harmon Foxbank in Charleston. It will feature 109 homes, located 25 miles from Downtown Construction will begin next month, and homes will be available to rent early next year. Harmon Foxbank will be exemplary of the other communities that will be built under the brand, featuring a combination of three- and four-bedroom townhomes and detached single-family houses, dedicated outdoor spaces, walking trails and pocket parks. According to the partnership, Harmon communities will aim to provide the best of single-family living, which includes privacy, extra space and sense of community pride.

According to Tony Chen, managing director of single-family build-to-rent at Crescent Communities, the platform will help to increase the supply of highly in-demand rental housing. The popularity of single-family rentals has swelled during the pandemic. Single-family rent growth was up 5.3%, the highest increase in 15 years, according to the latest CoreLogic Single-Family Rent Index. Strong rent growth this year will continue as supply shortages in the for-sale housing market and ongoing demographic pressure from aging millennials persist, the company’s analysts said.

This year, rent growth has slowed, but still remains at record highs, illustrating longevity in the somewhat new investment class. The Single-Family Rental Market Index from John Burns Real Estate Consulting and The National Rental Home Council cooled slightly to 84 in 2Q21, down from an all-time high of 90 in 1Q21. While down sequentially, the index is still sharply higher year over year from 76 in 2Q20.

Like this joint venture from Crescent Communities and Pretium, investment capital has pivoted quickly to respond to the demand. Research from Trepp shows single-family rental construction has increased 66% with 50,000 new homes added to the market.