Build-to-Rent: New Options for the Challenging Housing Market

April 12th, 2024

With mortgage rates nationwide at their highest since 2008, housing is challenging, and the market is adjusting to an increase in build-to-rent properties. In recent years, this trend has been especially evident in Colorado, as the average new home price in the state sits at $600,000—well above the national average.

“People cannot make down payments or pay mortgages but still want the benefits of living in a single-family unit,” said Civil Engineering Project Manager and Senior Associate Scott Brown. “Build-to-rent offers a perfect compromise.”

Although the build-to-rent concept has existed for over a decade, navigating the civil engineering and development process can still be complicated. The infrastructure and design differ from those of single-family for-sale developments. The design generally resembles an apartment complex on a larger scale, with homes and amenities built on a single large lot rather than multiple subdivisions.

The roadways are typically a private interior network with dry aisles and parking stalls, often arranged in circular patterns rather than connecting grid layouts. The entire subdivision is master-metered with a four-inch water main run like a private meter system through the site to supply all the units. Other considerations in the design include existing utilities, easements, roadways, future infrastructure, and any comprehensive plans that could impact the property layout.

However, some jurisdictions have never encountered build-to-rent developments and do not have the necessary codes to accommodate such designs, as most approach the development from a perspective focused purely on single-family for-sale properties.

“It is not something widely seen in Colorado, so dealing with entitlements and working with the jurisdiction to determine where it fits within their code can be tricky. It requires significant upfront coordination,” said Brown.

This is where Galloway’s development services team plays a crucial role. Our team comprises land use professionals who understand the complexities of this process.

Initially, our team conducts a formal pre-application process or informal discussions with the city planner, sometimes involving representatives from other city departments. This process involves asking questions such as: Has the city encountered this development before? How did it fare with the city council? Was it approved, and how did it align with the city code?

Every jurisdiction has different zoning districts. Some are better suited for this type of housing due to anticipation, while others may have more traditional codes. If the city operates under more traditional codes, our team educates them on how the development will be maintained, owned, and operated.

“There are many educational exchanges between the cities and our clients,” said Development Services Team Manager and Principal Tasha Bolivar. Our team bridges that gap and reviews and understands the code to see how we can fit or modify the design from their typical layout or if we need to pursue a planned unit development (PUD).”

The Cottages at Jet Wing in Colorado Springs, Colorado.

A PUD is a customized residential zoning development plan that outlines density, land use, development standards, and clustered open space. It replaces traditional zoning and typically involves public hearings and meetings with the planning commission and city council. PUDs can set a precedent, and our current build-to-rent projects have done just that.

The city of Colorado Springs even referred one of our current clients to our plan sets as an example, and our plan sets have become a template for their project moving forward.

“Galloway’s overall experience in multifamily and single-family housing meshes together to create this unique build-to-rent product,” said Brown.

We have been active in the build-to-rent market for over two years, working on projects along the Front Range, including Colorado Springs, El Paso County, Aurora, and Greeley.

“We aim to attract more clients and further strengthen our position in this area,” said Bolivar. “We want to be at the forefront and capture this market.”