Build-to-rent communities are quickly becoming the most sought-after new asset class. According to Noam Franklin, a founder of Berkadia's JV Equity & Structured Capital group, investment capital is pivoting from multifamily to build-to-rent investments in response to surging demand.

"Capital sources such as private equity funds have recognized the increased demand for rental product across the country and are pivoting dollars away from other asset classes in real estate and doubling down on the residential space," Franklin tells GlobeSt.com. "While traditional multifamily remains attractive to these investors, our team has noticed a significant increase in interest in purpose-built build-to-rent single-family product since early 2020."

A recent deal with Capstone Communities is among the most recent examples. Franklin, along with Chinmay Bhatt and Cody Kirkpatrick, secured a programmatic capital partner for Capstone Communities' BTR pipeline. The team sourced $37 million of equity for the first two projects in Port St. Lucie and Myrtle Beach. The deal is one of many that the team has worked on in the last year. "To give you a sense of that demand, our team has capitalized over $500 million of opportunities within the BTR space – most of it programmatic in nature—over the past 12 months. We also have a robust pipeline of deals slated to close in the next quarter," says Franklin.