A Charlotte apartment developer is spearheading a mixed-use project next to a Wieuca Road Baptist church that includes plans for a new office building.

The monument sign for the Church at Wieuca in Buckhead

Crescent Communities applied for special administrative permits Jan. 9 with the city of Atlanta to develop a 300-unit apartment complex and a multistory office building at 3626 Peachtree Road, part of the Church at Wieuca campus.

The church’s lead pastor, Kevin Head, confirmed the nearly 2.5-acre parcel at the corner of Wieuca and Peachtree roads in Buckhead is under contract to Crescent but declined to disclose the pending purchase price. 

“We have finalized the purchase and sale agreement with them,” Head said. “It’s a significant step for us as a church.”

According to SAP applications filed by engineering firm Kimley-Horn, Crescent is looking to build 300 apartments with a parking deck, plus an office building with 6,500 SF of commercial space and a parking deck. 

Harvey Rudy, an Atlanta-area development vet and founder of HSR Development Services, is the development partner with Crescent, continuing his affiliation with the site that he first established while with Greenstone Properties. Rudy said Crescent is considering a 375K SF office building on the site.

Crescent Commercial Managing Director Sagar Rathie declined to comment further about the project.

“Crescent Communities is excited about our continued investment in Buckhead, and we look forward to sharing more details in the future,” Rathie said in an email.

This is the latest iteration of the redevelopment of the Church at Wieuca’s land. Greenstone previously partnered with the church in 2021 on redevelopment plans. Two years later, the firm announced it had partnered with Toll Brothers to build townhomes, 400 apartments, 500K SF of office space and 12K SF of retail space on the site, but the project ultimately failed to materialize. 

Rudy was previously Greenstone’s development head, responsible for such projects as HD Supply’s 220K SF headquarters near The Battery in Cobb County and the 14th + Spring office tower in Midtown. Rudy continued to do planning for the Church at Wieuca when he formed his own firm in 2024.

Developers have scaled back to historically low levels of new office construction.

Courtesy of Harvey Rudy

HSR Development Services founder Harvey Rudy

Portman Holdings delivered its 525K SF Ten Twenty Spring office building in Midtown in 2024, which snagged consulting firm EY as an anchor tenant last year. The only other office under construction in Atlanta is 1072 West Peachtree, the 60-story mixed-use skyscraper by Rockefeller that includes 224K SF of office space and is set to deliver this spring, according to a fourth-quarter CBRE office market report.

A recent upswing in Atlanta’s office fundamentals, especially among landlords that own the city’s collection of trophy towers, could be encouraging developers to consider planning for new office development once again, said Sara Barnes, Avison Young Southeast market intelligence manager.

“I have a feeling some developers are going to start considering it,” Barnes said. 

Office tenants inked more than 7M SF in 2025, focused mainly on Class-A and trophy properties, according to a Q4 Avison Young report. In fact, nearly three-quarters of all new leasing activity in 2025 was among Class-A and trophy office properties as tenants vied for high-caliber office spaces amid back-to-office initiatives, according to Avison Young.

Metro Atlanta office landlords tallied negative net absorption of more than 475K SF last year, but trophy tower owners saw nearly 468K SF of positive absorption, demonstrating the growing bifurcation in the office market.

Still, Barnes said she doubts any developer will break ground on office in the next 12 months, especially as they must pencil in elevated construction costs. The average price to develop a new urban office building is around $750 per SF, up $200 from five years ago, according to data compiled by Avison Young senior associate Nick Steen. 

Further interest rate cuts and further cooling of the trade wars, however, could help push construction pricing downward, but most developers will likely sit on the sidelines in the near term rather than risk building new office space, Barnes said.

“Spec development, I still think we have a little bit to go before we see that break ground,” she said.

Gwinnett County’s redevelopment agency is slated to buy the shuttered Sears store at Gwinnett Place Mall as it pushes forward on the defunct retail center’s rebirth. 

Gwinnett County is purchasing the former Sears store at Gwinnett Place Mall.

The Urban Redevelopment Agency of Gwinnett County unanimously approved the purchase of the 11.5-acre vacant Sears store and adjacent parking lot for $11.5M during the agency’s special meeting on Tuesday. 

The empty department store is owned by Northwood Ravin, which purchased it in 2018 from Sears for $11M, according to Gwinnett County records.

The acquisition brings the county one step closer to its longtime goal of redeveloping the ailing mall. Later this month, Gwinnett officials plan to issue a request for proposals from developers for their vision on the mall’s rebirth, Nicole Love Hendrickson, who heads the URA and is chairwoman of the Gwinnett County Board of Commissioners, told Bisnow on Wednesday.

Those visions would likely involve developers razing parts of the existing mall, Hendrickson said. The main 562K SF enclosed portion of the mall — which the county purchased from Moonbeam Capital in 2021 for $23M — was used as a set for Netflix’s Stranger Things in 2019.

“It’s likely some parts of it will have to be torn down, but we have to wait for those proposals to come back to see what needs to stay, what needs to go,” she said. 

The Sears deal is expected to close by the end of October, after which point the county will command 87.5 acres of the mall property, including the former Macy’s department store that Gwinnett purchased in 2024 for $16.5M. 

The sale officially ends any ambition Northwood Ravin, which is primarily a multifamily developer, had for the former Sears store. Hendrickson said talks about the county buying its portion of Gwinnett Place Mall had been evolving for some time but became more realistic after Gwinnett bought the Macy’s anchor last year. 

“It signaled to them that it was time to let go of the property,” she said. 

Charlotte-based Northwood Ravin didn’t respond to a request for comment.

The Board of Commissioners approved a plan in 2023 to redevelop the mall with up to 3,800 new housing units set in seven different villages, 55K SF of retail centered around a 4.4-acre central park, 50K SF of office, and a 52K SF international community cultural center and a public parking garage. 

The county is also proposing turning the current ring road around the mall into a 1.25-mile greenway with sidewalks and a cycle track.

The two open mall anchors, Asian department store Mega Mart and beauty supply retailer Beauty Master, own their own spaces. Hendrickson said the county has reached out in the past about acquiring their real estate so Gwinnett can have complete control over the property, but those talks have gone nowhere. 

“I think ultimately having 100% of the property would give us prime opportunity to redevelop it,” she said. “Having the existing anchor tenants there will make it a challenge but won’t make it impossible. We are not pressuring any of the anchor owners to give up their properties.”

The redevelopment will also include a new multimodal hub for rapid bus, microtransit and vehicles, called the Gwinnett Place Transit Center, a project largely funded by the Federal Transit Administration. The transit center, located on a county-owned parcel across from the former Macy’s department store, is expected to finish in 2032.

The actual redevelopment of the mall, though, will likely take much longer. Hendrickson said the eventual developer and its vision for the project will determine the timeline for redevelopment.

“Commercial mall redevelopment typically takes 25 to 30 years,” Hendrickson said. “It’s a legacy project. I probably won’t be in office by the time this is complete. But I can say I had a hand in getting it off the ground.”

Tishman Speyer has completed its first office acquisition in its hometown since before the pandemic.

The New York City office giant, which owns Rockefeller Center and The Spiral, spent $105.5M on a fully leased, 12-story office building in Lower Manhattan.

148 Lafayette St., a fully-leased office in Lower Manhattan, which became Tishman Speyer’s first NYC office acquisition in more than half a decade this week.

Tishman Speyer acquired the 153K SF building, which was built in 1913 and renovated in 2017, from EPIC, it announced Monday. The boutique office tower is Tishman’s first U.S. office purchase since 2021 and its first in New York since 2019. 

Current tenants in the building include venture capital firm General Catalyst and cosmetics and beauty company Charlotte Tilbury. The acquisition was partially funded by a $68.3M loan from Blackstone Real Estate Debt Strategies.

 

A Newmark team led by Adam Spies and Avery Silverstein represented EPIC. It’s unclear who represented Tishman Speyer. 

TOP SALES

The Hotel Bossert has changed hands for $100M, Commercial Observer reported. The 282-key, 1909-built hotel at 98 Montague St.’s new owner is Nashville-based developer SomeraRoad, which plans to convert it into housing. The trade marks the end of a chapter for the historic, troubled Brooklyn property, which Chetrit Group lost control of in February after lender Beach Point Capital acquired it in a foreclosure action. Chetrit had owned the Hotel Bossert since 2012, when it bought it in a joint venture agreement with Clipper Realty before buying Clipper out in 2019. But Chetrit then defaulted in 2022, eventually leading to the foreclosure. Beach Point acquired the $112M note for the building last year.

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Clipper Equity has acquired 1800 Park Ave., a vacant Harlem lot owned by The Durst Organization since 2017, for more than $50M, The Real Deal reported. The 680K SF plot has changed hands four times in recent years: Vornado Realty Trust bought it for $39.5M in 2007 and sold it to Continuum Cos. for $66M in 2013. But Continuum, which had planned a 700-unit apartment building, fell behind on its loans, leading to the Durst Org. swooping in and buying $100M of the building’s debt. The Dursts then acquired the lot itself for $91M a few years later but failed to kick off its own plans to build housing before the 421-a tax break expired. 

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A Midtown office building has sold from one Milanese family to another for $22.4M, Commercial Observer reported. Pierluigi Tortora, founder of PLT Energia, bought 30 W. 56th St. from Massimo and Alberta Ferretti, who own luxury fashion brand Ferrim USA. The sale price is a whopping $19M above the $3.8M that the Ferretis paid for the 22K SF office building in 1994, PincusCo reported. PLT Energia plans to take over the building and use it for its own offices.

TOP LEASES

Atlantic Terminal, where Nike signed a 16K SF retail lease this week.

Nike has signed a 16K SF retail lease at Atlantic Terminal and Center adjacent to the Barclays Center, according to a release. The retail space with a street-facing entrance adds the athletic apparel maker to the roster of brands nearby, including Sephora, Uniqlo, and Dave & Buster’s. Inline Realty’s David Alani represented Nike, while Atlantic Terminal and Center ownership was represented by Cushman & Wakefield’s Alan Schmerzler, Diana Boutross and Ian Lerner.

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Consulting engineering firm Jaros, Baum & Bolles has signed a 68K SF lease in the Financial District at 55 Water St., Commercial Observer reported. The firm will relocate to the 53-story tower, which is owned by Retirement Systems of Alabama, from 80 Pine St., according to Colliers’ May Manhattan office report. The tenant roster at Jaros, Baum & Bolles’ new digs includes The Legal Aid Society, the New York City Board of Education Retirement System and human resources service Justworks. 

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Fisher Brothers signed tenants to 67K SF at 299 Park Ave., a 1.3M SF office tower in Midtown East, according to a release. Investment firm One William Street Capital Management has added 15K SF to its existing 30K in the 42-story building, bringing its total footprint to 45K SF. One William, which relocated from 1290 Sixth Ave. in 2018, was represented by Scott Gottlieb, Andrew Sussman, Ben Friedland and Lewis Gottlieb of CBRE. Private equity investment firm P10 Intermediate Holdings, expanded its space by 9K SF with representation from CBRE’s Silvio Petriello. Consulting firm Tailwind Management is moving to the building in a 14K SF deal. Tailwind was repped by Savills’ Greg Taubin. Newmark’s David Falk, Peter Shimkin, Andrew Sachs and Eric Cagner repped the landlord in all three deals, along with Fisher Brothers’ Marc Packman and Clark Briffel.

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AI-driven marketing intelligence firm AlphaSense is moving its NYC headquarters to the Hudson Yards neighborhood, New York Business Journal reported. The firm, which supports tech companies, signed a 10-year lease for 50K SF at CommonWealth Partners’ 441 Ninth Ave., relocating to the 25-story office building from its current home at 24 Union Square E., Commercial Observer reported. Savills’ Allyson Bowen and Erik Schmall repped AlphaSense.

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Elderserve Health, a senior care nonprofit that does business as RiverSpring Health Plans, renewed its 15K SF Midwood office lease, Commercial Observer reported. The nonprofit first moved into the Brooklyn office space at 1630 E. 15th St. in 2020. Asking rents in the new deal were $45 per SF. The building was owned by Urban Edge Properties, but the property was put into foreclosure in 2023 and last year was handed over to the special servicer of the CMBS trust that holds the mortgage. The tenant was repped by Cresa’s Bert Rosenblatt, Peter Sabesan and Alex Gerome. Ownership was represented by Michael Taylor of Lincoln Property Co. 

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Law firm Foster Garvey has signed a 10-year, 11K SF lease at Jack Resnick & Sons’ One Seaport Plaza, according to a release. The landlord intends to renovate the 1.1M SF tower later this year. Other tenants include WeWork, Seaport Entertainment and insurance firm Allied World Insurance. Foster Garvey was repped by Savills’ Nicholas Farmakis and Steve London. The landlord was repped in-house by Brett Greenberg and Adam Rappaport and by John Cefaly, Ethan Silverstein, Stephen Bellwood and Rachel Rosenfeld of Cushman & Wakefield. The law firm plans to relocate from 100 Wall St. to the 35-story 199 Water St. building in the fall, Commercial Observer reported.

TOP FINANCING DEALS

222 E. 34th St., in Kips Bay, where owner the Hakim Org. scored a $99.8M refinancing deal from Northwestern Mutual Life Insurance Co. this week.

The Hakim Organization nabbed a $99.8M refi for 222 E. 34th St., a 480-unit residential building in Kips Bay, from Northwestern Mutual Life Insurance Co., PincusCo reported. The capital replaces a loan for the same amount from the same lender, with an extended maturity date of June 15, 2030. 

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Rockrose Development scored an $80M loan for 110 Horatio St., a 10-story, 94K SF West Village multifamily property, according to a release. The financing — a 10-year, fixed-rate loan — was provided by investment manager AXA IM Alts, which was acting on behalf of its clients. The 152-unit property, which is a mix of studios, one- and two-bedroom units and five penthouses, is 99% occupied. A JLL team that included Geoff Goldstein, Steven Klein and Chris Pratt arranged the financing.

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Pro-H Development notched a $77M loan from Urban Standard Capital to finance a 101-unit condo project at 842 Sixth Ave., Commercial Observer reported. The vacant lot was once expected to become a 26-story hotel, but last year 842 Enterprises sold the lot to Pro-H for $30M after the planned hotel wound up facing a $33M preforeclosure action from lender Avana Capital. Now, the 27-story condo tower that will take the would-be hotel’s place is slated for completion late next year. A Ripco Real Estate team of Adam Hakim, James Murad and Alexander Korolik arranged the financing.

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New York Life Insurance Co. has loaned $60M to Altitude Capital Management for the 273-room Courtyard by Marriott New York Manhattan hotel at 135 W. 30th St., PincusCo reported. The sum replaces a previous $60M loan from Voya Financial.

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Community Preservation Corp. provided a $44.1M mortgage to Lemle & Wolff Cos. for a residential development in Sunnyside, PincusCo reported. Lemle & Wolff is in partnership with nonprofit Elmcor Youth & Adult Activities for the 42K SF development, which will deliver 55 units at 43-12 50th St. The construction loan also replaces a previous $6.6M loan on the property from Webster Bank.

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John Catsimatidis’ Red Apple Group refinanced its 86-unit residential building at 670 Pacific St. for $38.1M with M&T Bank, PincusCo reported. The loan on the 84K SF Prospect Heights property replaces a $49.5M sum from the same lender that matured May 30. Red Apple was required to make a $5.1M principal payment and a note modification fee of $190K. Its new loan has to be no more than 80% loan-to-value based on a new appraisal, and has a new maturity date of Sept. 1, 2027.

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Elmord Management netted a $34.3M construction loan for a nine-story multifamily rental project in Astoria, Commercial Observer reported. The two-year bridge loan for 34-20 38th St. came from BridgeCity Capital. Elmord bought the five-parcel development site for $12M from the Pinto Family, PincusCo reported. The development, which is expected to deliver at the end of 2026, will include 89 units and 31 parking spaces.

BWE secured a $23.5 million loan to finance the acquisition and substantial improvement of The Edge, a 173-unit, 553-bed student housing community near Texas State University in San Marcos, TX. 

BWE’s Chris Carroll and Max Miller originated the financing on behalf of Campus Realty Advisors. Texas State has seen a surge in enrollment, which has increased by 5% over the last year to bring the entire student body above 40,000. 

The Edge features a mix of 1-, 2-, 3-, and 4-bedroom apartments and offers students a wide range of amenities, including a fitness center, clubhouse, and basketball court. The community is located less than a mile from the Texas State campus. 

As part of the acquisition, The Edge will receive numerous upgrades to improve the residents’ experiences. All units will receive new flooring, cabinets, and doors, upgraded bathroom fixtures, and improved lighting. The clubhouse, study areas, fitness center and other amenities will also receive major improvements to enhance the students’ sense of community. 

Jamestown will acquire the Atlanta subsidiary of Cincinnati-based North American Properties (NAP). The Atlanta subsidiary, which has $2 billion in assets under management as of June 2024, is an owner/operator and real estate services provider of mixed-use properties in suburban, high-growth markets across the Eastern U.S.

As part of the transaction, a Jamestown affiliate will invest in several Atlanta area retail centers. These centers include Colony Square (Atlanta, Georgia), The Forum Peachtree Corners (Peachtree Corners, Georgia) and Avenue East Cobb (Marietta, Georgia). The deal also included a handful of out-of-state lifestyle centers.

Upon closing, the Atlanta-based operating platform and its assets will move forward under the Jamestown name—as will its more than 200 employees.

Established in 1996, the NAP subsidiary positioned itself as a boutique, full-service developer pursuing opportunistic returns. This allowed the subsidiary to assemble a portfolio of underutilized lifestyle destinations and maximize their potential through value-add, experiential redevelopment projects.

With the perception that real estate values are bottoming, one of the biggest private equity players in the industry is planning to ramp up its property acquisitions in the coming months.

Bisnow/created with assistance from Microsoft Copilot

KKR sees larger opportunities to buy commercial real estate in the rest of 2024.

After spending $8B in the second quarter on mostly real estate buys, as of April 1, New York-based KKR & Co. had closed or was under contract to outlay $10B in real estate equity, KKR co-CEO Scott Nuttall said on the firm’s earnings call Wednesday.

“The real estate investment opportunity is highly compelling,” Nuttall said, adding that the firm has a “full pipeline as some owners of real estate seek liquidity and sell their best assets.”

“And in this environment, scale is trading at a discount,” he said. 

KKR generated $668M of net income in the second quarter, and its revenue in the first six months of 2024 doubled year-over-year to $13.8B. It increased its assets under management by 16% to $601B, including $152B in real assets, which includes real estate, according to its earnings report. 

Last month, KKR purchased 18 multifamily properties from Charlotte-based Quarterra for $2.1B. The apartment portfolio encompasses 5,200 units spread across several states, including California, Washington, Florida, Texas and Georgia. KKR is also under contract in a joint venture with Dalan Management to buy a 43-story Brooklyn apartment tower for $240M, The Real Deal reports.

“We believe this is a great moment to invest in real estate, as transaction activity starts to pick up on the heels of two years of dislocation in commercial real estate markets,” KKR partner and Head of Real Estate Equity in the Americas Justin Pattner said in a press release announcing the Quarterra deal.

KKR is joining a growing chorus of investors signaling that they are getting more aggressive about buying properties. Blackstone bought $34B in real estate in the second quarter, including taking both Apartment Income REIT and Tricon Residential private, after which President Jonathan Gray said CRE values are bottoming out, with more buyers hitting the market.

“Volatility and uncertainty are still with us. So far, 2024 feels like it could be a sweet spot year where values are attractive and activity levels are high,” Nuttall said on the earnings call. “This year, we not only have an open market, we have pent-up supply of deals that didn’t get done the last couple of years coming to market, so we are optimistic.”

Investment giant KKR has scooped up more than 5,000 apartments across the country in a deal that represents its biggest-ever bet on the sector. 

The company has purchased 18 properties from Charlotte-based Quarterra for $2.1B, it announced Tuesday.

The 5,200 units are spread across several states, including California, Washington, Florida, Texas, Georgia and North Carolina, Colorado and New Jersey. The Wall Street Journal first reported the deal. 

It comes six months after Quarterra’s parent company, Lennar, announced it was looking to sell more than 11,000 apartment properties that Quarterra operates, which it said could earn $4.5B. 

KKR executives said in Tuesday’s release that the firm likes the fundamentals of the apartment sector, and this portfolio serves high-growth metro areas where new supply will slow down significantly in a few years.

“We believe this is a great moment to invest in real estate, as transaction activity starts to pick up on the heels of two years of dislocation in commercial real estate markets,” KKR partner and Head of Real Estate Equity in the Americas Justin Pattner said. 

The firm plans to work with multifamily operators Carter-Haston, MG Properties and Dalan Real Estate to operate the assets. 

Law firm Gibson Dunn & Crutcher advised KKR on the transaction, while Troutman Pepper Hamilton Sanders and JLL advised Quarterra.

KKR, which had $71B in assets under management as of the end of the first quarter, has completed a few other multifamily acquisitions this year. 

In April, it purchased a 19-property student housing portfolio from Blackstone Real Estate Income Trust over 10 states for $1.64B. In January, it purchased two multifamily properties in London from British-based Quintain, totaling 490 units.

Jasmine Kilman is Content Director of Connect Commercial Real Estate, covering Chicago and greater Chicagoland, the Midwest, Seattle, and the Pacific Northwest. She covers industry trends, transaction deals, market research, and produces daily news stories.
With experience in marketing and communications for academic nonprofits and corporate clients, including Hearst Media, Hilton, and Coldwell Banker, Kilman has written about commercial real estate, environmental, social, and corporate governance (ESG), technology, healthcare, and philanthropy. She was born and raised in California and graduated with a degree in public relations. In her spare time, Kilman enjoys hiking and traveling to new locations with her family.

CenterSquare Investment Management and PAGEWOOD have joined forces to acquire Gateway Industrial Commons, a 621,000-square-foot industrial services facility (ISF) portfolio. ISFs are typically truck terminals, material and container storage yards, and equipment maintenance facilities.

Comprised of 46 buildings spanning nine properties in the NW submarket in Houston, the Portfolio caters to a diverse array of service-oriented tenants and accommodates users of various sizes, with spaces ranging from 1,000-30,000 square feet.

New Service Industrial inventory remains limited, due to both high barriers to entry and rising construction costs, positioning sector fundamentals to remain favorable for the foreseeable future. 

CenterSquare and PAGEWOOD intend to address deferred maintenance and make a range of capital improvements throughout the properties. The JV says with improved aesthetics and institutional management of operations, the Portfolio will be positioned to significantly increase the in-place rental rates to align with prevailing market rates and drive meaningful growth of net operating income.

How does a fund seeking to buy $200M worth of single-family houses in the Southeast and turn them into rentals deploy that much capital? One unsolicited text at a time.

Investors are flooding the for-sale homebuyers market in Atlanta and the Southeast to turn them into rentals.

C-Star, a New York-based investment firm, is raising $50M in equity for a fund to buy single-family houses and convert them to rentals in Georgia, Florida and the Carolinas over this coming year, Michael Nemirovsky, the vice president of the investment fund, told Bisnow. With debt, the fund will look to spend $200M buying houses.

The single-family rental fund is C-Star’s third; its first launched in 2018 and spent $5.6M on 36 single-family homes in Metro Atlanta at a total cap rate of 7.5%, Nemirovsky said, and earlier this year, C-Star sold it to an SFR operator for $10.5M and an in-place 4.5% cap rate. Nemirovsky didn’t identify the buyer.

“We have seen multiple offers, five cash offers, for Fund I,” CEO Sherry Li said.

C-Star’s second fund expanded its geographic reach to include the Research Triangle and Charlotte areas of North Carolina and amassed $24M in investor funding. Li said the firm will hold this fund for two more years before marketing it for sale.

The third fund has already raised $10M, C-Star officials said, largely from high net worth investors and family offices. Spending it is another matter.

“It’s hard to deploy the capital,” Li said.

U.S. home prices are at all-time highs and mortgage rates are rising fast. To compete for deals, C-Star has an in-house team of 11 people who canvass the National Association of Realtors’ Multiple Listing Service, leverage relationships with management companies and, yes, send out text messages to homeowners, hoping to entice them to sell, Li said.

Li said the typical home purchase in the two earlier funds was between $150K and $250K. C-Star then did light renovation work, roughly $10K per house, before putting them on the rental market. But today’s marketplace necessitates C-Star getting a little more aggressive for the third fund.

Not only did it expand its geographic reach in the Southeast, the hub for SFR activity in the U.S., to include South Carolina and Florida, but it is now raising the amount of money it is willing to spend on houses: between $200K and $300K per house and spending up to $30K in renovations each, Li said.

C-Star is just one player in a crowded field of investors chasing SFR properties. A handful of neighborhoods originally planned for sale are now turning into rental campuses after being acquired by institutional investors. Other builders are constructing entire single-family neighborhoods with the intent of renting the units.

Brock Thomas, the founder and CEO of Swift Street Investments in Kansas City, Missouri, said he scours records for homeowners who are behind on mortgage payments to make purchase offers and then converts those homes into rentals.

“There’s just so much demand. And that’s not just from buyers, but from renters as well,” Thomas said. “Believe me, I look for reasons not to buy. Right now, I think there’s just this small window of opportunity in the market.”

C-Star is part of a universe of aggregators who buy single-family houses and turn them into rentals for a housing-hungry population, then amass a portfolio and ultimately sell it to larger institutional investors, who committed $45B to buy into the sector last year, PERE reported, citing data from John Burns Real Estate Consulting.

While the activity only accounts for a sliver of overall housing transactions, it is a fast-growing segment, with critics who say the investor rush been partially to blame for fast-rising housing prices that are elbowing many first-time or lower-income homebuyers out of the market.

According to Green Street Advisors, there are 16 million single-family rental homes in the U.S., which encompass 35% of all rental units, an amount that has increased 25% over the past decade. In the next five years, 810,000 households are expected to sign leases for single-family houses, according to Green Street, 1.5 times higher than the rate of those renting apartments.

“There’s a lot of pressure. There’s a lot of pent-up demand,” said Tom Johnston, the director of brokerage services for SVN SFRhub Advisors, which brokers portfolio sales in the SFR market. “There’s so much money in the space.”

C-Star will be facing enormous competition. The median home value in Georgia was just over $300K in March, according to Zillow, a more than 20% increase from 2020. The average sales price in the state jumped 17% to nearly $370K, according to the Georgia Association of Realtors. Georgia is the most popular state for SFR companies, which own 5.1% of all single-family rental properties, according to Green Street. Florida ranked second at 4.2%, followed by Arizona at 3.7%.

While scattered throughout Metro Atlanta in counties like Gwinnett, Fulton, Newton and Clayton, a number of C-Star’s homes are south of the city, where housing prices tend to be more moderate.

“We tend to be choosing [more] the entry homes than the medium or luxury homes,” Li said. “That’s what most renters are interested in.”

For groups like C-Star, increased competition from larger investors and institutions will become harder to overcome as interest rates continue to rise in the coming months, Johnston said.

“I think the smaller operators who have to use leverage to buy portfolios are at a disadvantage to the big funds. As we see interest rates creep, we’re going to see the smaller operators are going to have to look harder for the good deal,” he said. “It’s certainly going to favor the larger institutional operators who have cash and more funds. I think it gives them more leverage.”

Regardless, the demand for SFR is increasing, Johnston said. Last year, his firm sold 1,500 homes across the U.S. for just under $300M.

“We will probably hit that number or near that number by June,” he said, projecting that SFRhub could sell $500M in houses this year to SFR investors.

Thomas said the current housing environment is prompting many investors to be more aggressive in their buying strategies, especially with funds that have penalties if they don’t deploy capital within certain time frames.

Thomas said Swift Street only uses in-house capital from previous investments to buy new homes. His firm is now looking to buy traditional multifamily properties as well, in an effort to diversify its holdings.

“Most people used to find the deal before they raised the capital. Now the capital is getting raised before they find the deal,” Thomas said. “How does a homeowner compete? These houses aren’t coming back to the market. These houses are going to be traded like mortgages.”

Despite the competition, Li said C-Star is not experiencing any pressure to hurry up and buy assets from its investors. Instead, Li said she expects rising rates to chase more buyers away from the market, giving investors a larger pool of homes to choose from.

“I think over time, especially with the Federal Reserve rising interest rates, you will see fewer homebuyers on the market and they will become renters,” she said.