PCCP LLC, along with the California State Teachers’ Retirement System (CalSTRS) and a global institutional investor, have formed a joint venture to invest in purpose-built single-family rental (SFR) communities located in primary and secondary U.S. markets. The venture will initially have more than $1 billion in purchasing power.

“PCCP has identified a scalable opportunity in the build-for-rent (BFR) space as this sector provides attractive supply/demand characteristics,” said PCCP partner Jim Galovan. “With a nationwide shortage of single-family housing supply, we see the strongest demand for this BFR sector coming from Millennials and Baby Boomers, however, it is also attractive to a wide range of renter demographics.”

Galovan observed that the housing shortage is most acute in rental units ranging from 1,200 to 2,000 square feet as developers find this size range to be less economical to build. In addition, this size range is usually larger than units offered in apartment communities.

While the investment thesis is more structural than COVID-driven, the housing market is experiencing an added post-COVID demand surge for this product type, given a consumer desire for physical distance from neighbors and low density living with space to work from home and non-communal outdoor space.