M&A / FundingProptechReal Estate

Core Spaces and Harrison Street pledge $1.5B to bring major metros build-to-rent communities

Chicago-based Core Spaces, a residential real estate developer, owner and operator, and Harrison Street, an investment management firm focused exclusively on alternative real assets, announced a joint venture on Monday that will bring single-family build-to-rent communities to major metros in the United States.

The partnership will see the pair invest up to $1.5 billion to build and acquire within these build-to-rent (or “BTR”) communities. According to a release, the two are aiming for investments in high-growth suburban markets – likely with top-tier schools and job centers.

Their current BTR pipeline consists of $2.5 billion in total capital and over 6,500 units in markets like Austin, Denver, Dallas, Orlando and Nashville.

“Affordability challenges in the U.S. housing market and changes in lifestyle preferences are driving demand for single family rentals and we believe our progressive design and hospitality-driven approach will differentiate our BTR communities in the single-family rental market,” said Dan Goldberg, President of Core Spaces.

The partnership arrives at a pivotal time as investors are now flooding into the market again, after falling back a bit during the first year of the COVID pandemic. According to data from CoreLogic, for the first time since before the pandemic hit, all major metropolitan housing markets covered showed positive rent growth in October.

Molly Boesel, economist at CoreLogic, said the ongoing preference toward more living space – and slim for-sale inventory – is forcing would-be buyers back into renting, putting significant strain on the single-family rental market.

Over a decade prior to the market’s current pressure, Core Spaces has been working to develop and acquire residential projects valued upwards of $6 billion across the U.S.

As for Harrison Street, founded in 2007, the firm has developed and acquired more than 27 BTR-style student housing communities in an effort to guide young college students away from typical mom-and-pop landlords.

The pair have worked together previously on nine BTR developments – currently in various stages – for student housing transactions at U.S. universities like UC Berkley, Auburn and Georgia Institute of Technology.

“The U.S. single family BTR market is a rapidly expanding asset class with strong demographic tailwinds, and we are excited to draw from our U.S. student housing BTR experience alongside Core Spaces, an experienced developer and operator with significant residential real estate expertise, to identify attractive investment opportunities,” said Christopher Merrill, Harrison Street’s Co-founder, Chairman and CEO.

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