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Originally posted on the Atlanta Business Journal

By: By Jim Jacobi , Parkland Communities, Inc

Surging demand has made build-to-rent communities the fastest-growing trend in homebuilding today. According to the Pew Research Center, more U.S. households are headed by renters than at any point since at least 1965. This trend is still growing. Why is this? Well, there are a plethora of reasons that have kept potential homebuyers out of the market and turned them into home renters, including student debt, a tight job market, the desire for increased mobility and lack of a down payment.

However, a major reason people rent, especially millennials and Generation Z, is that they cannot afford to purchase a home in the area of town they want to live. Atlanta, like most major cities, is struggling to provide affordable multiunit housing solutions due to zoning and density restrictions in popular areas. Within the housing industry, this concept is known as the “missing middle.”

John Hunt, principal with MarketNsight, characterized the missing middle as “a single-family home located alongside what looks like a single-family residence but is really a duplex, quad, eightplex or more.” He went on to say that the building strategy provides diverse housing choices and helps encourage density that supports local amenities. However, zoning laws make middle housing illegal in many cities.

According to an article in ProBuilder, single-family rentals will be undersupplied for the next decade, and predictions are that this segment of the industry could grow by as much as 700,000 units. In fact, since housing recovered from the Great Recession, the single-family home rental segment has progressed to be composed of mostly large investors with massive home portfolios such as Tricon Residential, Invitation Homes, American Homes 4 Rent and others.

Now builders and investment companies alike are starting to build new homes for the purpose of renting them to help meet the growing demand for this type of housing. One reason that building new single-family rentals is gaining popularity with investors is that new homes require fewer capital expenditures than existing homes. Of course, there is a wide range of product types included in build-to-rent, from single-family homes to townhomes, stacked flats or even duplexes or triplexes.

In my experience building homes for rent, I have learned a few important lessons that home builders and investors can use to capitalize on creating build-for-rent homes that meet the demands of missing middle housing.


First, it is important to think innovatively. My experience suggests that the typical single-family homes and townhomes that we have been building for decades won’t meet the current demand for missing middle housing. Think density, but focus on ways to keep it from looking dense. For instance, look at opportunities to innovate with the home plans and elevations. Stacked townhomes with rear-entry garages might present themselves to have fewer units than the project actually contains. I’ve also seen homebuilders build what looks from the outside like a mega-mansion but in fact is a building composed of eight or 12 condos. Consumers want to live in thriving areas and often want units as small as 800 or 1,200 square feet, so make sure to incorporate smaller sizes that meet consumer demand.

Understand zoning

Become an expert on what you can and can’t do in a particular area of town. Often the government will work with you to rezone a piece of property from commercial to residential, especially if it means helping companies in the area attract local workers and cut down on commute time.

Create amenities

Today’s consumers want it all. They want a location with walkability in a thriving city center where they can walk to restaurants, boutiques and a coffee shop. They also want green space. Plan carefully to include park space, sidewalks or walking paths, dog parks, fire pits, and other gathering areas.


It is important to do market research. Some of my best land finds have been due to the extensive research we do before starting a project. Don’t just trust your gut. Verify.

Satisfying the missing middle goes a long way to meeting demand and providing affordable options for workforce housing. Missing middle options provide invisible density because of how units are designed; thus, they are more palatable to municipalities that often reject typical high-density apartments.

Forbes states that single-family rentals have been a smart investment for years, and they will continue to be, especially during the COVID-19 pandemic. As people shy away from high-density apartment complexes, market trends indicate that living in suburbia — in a rental home community with a yard, a home office, plenty of extra storage space and a safe environment for the kids to play — may be the new American dream.

Jim Jacobi is President of Parkland Communities, focused on land investments and developing communities and lots for national and regional homebuilders.