Houston builder Wan Bridge is ready to place a big bet on the continuing popularity of build-to-rent housing.
The company says it will use a “multibillion-dollar capital commitment from a well-capitalized, investment-grade U.S. institution” to put up 20 to 30 build-to-rent communities in the suburbs of Dallas, Houston and Austin within the next year. The investment also will help finance its next five to seven years of growth.
The build-to-rent sector is becoming increasingly popular across the country as a tight housing market makes it more difficult to buy a home. Texas has emerged as one of the nation’s top markets for rental home developments.
Hunter Housing Economics, a real estate consulting firm, estimates that North Texas has nearly 3,000 build-to-rent units, second only to Phoenix’s 4,259 units. Houston and Austin are also hot spots.
Hunter’s projections place Dallas, Houston and Austin all within the top eight cities for build-to-rent units.
Wan Bridge owns homes in 13 communities completed or in development across Texas, including Brooklyn Village in Forney and the Residences at Rayzor Ranch in Denton, which is scheduled for completion in 2022. A four-bedroom home at Brooklyn Village is currently listed online with a rent of $2,180 per month.
The company’s homes aim to appeal to residents who prefer the flexibility of renting but still want access to more space and a neighborhood community as prices and demand for single-family housing continue to rise. According to Wan Bridge, 85% of its residents are millennial families.
Although homeownership is becoming increasingly unaffordable for many buyers, Wan Bridge CEO Ting Qiao said the company’s developments are meant to appeal to those who could buy a home, but prefer the convenience of renting.
“We are really looking at not the people who cannot afford a home, just the people who choose to rent. That’s basically our clientele,” he said.
Besides decreasing affordability, other trends have accelerated demand for single-family rentals, including the increased popularity of working from home and growing demand in suburban neighborhoods and Sunbelt markets.
Wan Bridge told the Houston Chronicle last year that it looks at suburban locations with good retail services, strong school districts and high demand for housing when selecting locations for its communities.
Qiao said strong housing demand in North Texas and corporate relocations to the area make it an attractive market to build in. He declined to name specific areas of North Texas that the company is targeting for development, but said the company plans to add 30,000 homes in “Texas’s top 50 submarkets” within the next five years.
Despite the company’s ambitious growth plans, Qiao said Wan Bridge has not been able to avoid the challenges affecting all builders, such as fierce competition for lots and constraints on the supply chain and labor market.
The struggle to find ready-to-build lots remains the biggest challenge. “The market is extremely hot––ready-to-build lots are like unicorns,” he said. In order to acquire land, the company is targeting paper lots and exploring a partnership with Houston developer Land Tejas to secure lots in master-planned communities.
Wan Bridge was founded in 2016 by Qiao, Danting Li and Bin Wan. It has $650 million in assets under management.
Correction: A previous version of this story incorrectly stated that Wan Bridge is the developer of Brooklyn Village, a real estate development in Forney. Bridge Tower Partners is the developer, operator and property manager of that project. Wan Bridge purchased units in the development from Bridge Tower Partners in 2019.
