The build-for-rent (BFR) market has experienced notable shifts recently, driven by fluctuating interest rates and evolving consumer demands that are reshaping development strategies nationwide. While some regions are seeing expansion, others face slower growth due to economic and regulatory pressures impacting the sector.
Bruce Larson, executive vice president at Bowman and an industry leader in build-for-rent, brings his extensive experience in regions like Arizona, Colorado, Florida, Texas and the Carolinas to shed light on current trends and challenges. In this Q&A, Larson shares insights on market dynamics and the future of BFR developments.
Q: What trends are you currently seeing in the build-for-rent market?
A: Since I began in the industry in 2015, I’ve watched build-for-Rent take off, especially in areas like Phoenix, where the market has been thriving. Recently, however, rising interest rates have caused a slowdown in the BFR sector. Many current projects are only moving forward because they had secured funding before the rates went up, but with rates hopefully declining in 2025, we’re seeing renewed interest in build-for-rent.
Another interesting trend is the growing demand for affordable housing within the build-for-rent market. These projects can access government grants or incentives, making them more attractive during periods of high interest rates. Unlike private equity-backed projects, affordable housing can rely on alternative funding. We are seeing steady growth in this sector across the country.
Q: Could you elaborate on the role of affordable housing in the build-for-rent market?
A: Affordable housing projects often benefit from government grants and incentives, which makes them attractive to developers in today’s economic climate. We work closely with cities to develop these projects at higher densities and can often reduce parking requirements if the development is near public transportation. This allows us to keep costs down and create more affordable units without compromising on quality.
Q: What types of build-for-rent structures are most common?
A: We focus on three main types. First, there are “horizontal apartments,” or casitas, which are single-story units with one to three bedrooms, small backyards and parking like in an apartment complex. This concept originated in Arizona but is now being adopted nationwide.
Second, we have single-family homes built specifically for rent. These homes resemble traditional single-family houses and appeal to those who might eventually want the option to buy. If the homes don’t rent as expected, they can be sold individually, making them more versatile.
The third type is townhomes built-for-rent. We’re even seeing some projects that initially planned for casitas shifting to townhomes to better meet current demand. These can be on single lots or larger multi-lot developments, depending on the area and demand.
Additionally, we’re seeing an increase in mixed-use developments that blend these different types within a single project. For instance, a community might include a mix of horizontal apartments, single-family homes and townhomes, offering housing options for a range of demographics and life stages.
Q: Aside from interest rates, what other challenges does build-for-rent present?
A: Interest rates are certainly one of the biggest challenges. As rates rose, developers and investors were initially shocked, though they’re now adjusting to the new normal. I think if rates stabilize around 5%, it will make the market more accessible again.
City regulations can also pose challenges. Some cities, seeing the rapid expansion of build-for-rent, worry about overbuilding. However, with rental demand still high, we’re confident that there’s room for more growth. We also encounter some community resistance based on misconceptions—people often assume build-for-pent projects are lower quality or resemble subsidized housing. But these are high-quality, professionally managed developments with rigorous tenant screening. They bring stability to communities and, in many cases, better oversight than traditional rentals.
Q: Is community education part of Bowman’s strategy in build-for-rent developments?
A: Absolutely. We leverage our experience in Phoenix and have extended this knowledge to other regions. We have local offices and teams that understand city codes, know key officials and can educate communities about the quality of build-for-rent projects. For instance, we recently met with a planning and zoning commission in a Utah city to explain the nuances of build-for-rent projects. Educating cities and communities helps dispel myths and build support.
Q: How is Bowman positioning itself to adapt to the evolving build-for-rent market?
A: We stay engaged by attending conferences, keeping up with industry news and frequently consulting with developers. While we’re not financial advisors, we offer engineering insights to ensure project feasibility. Additionally, we conduct extensive surveys to guide our work and refine our approach, ensuring our projects meet market demands.
About Bruce Larson
Bruce Larson, PE, is the executive vice president and divisional manager at Bowman, bringing more than 35 years of experience in civil engineering to his role. Over the course of his career, Bruce has overseen a wide variety of private and public sector projects across the Southwest, specializing in land development engineering, master-planned communities, multi-family developments, land planning, capital improvement initiatives, commercial projects and the growing build-for-rent market. His deep understanding of municipal, state and governmental requirements positions him as a trusted leader in navigating complex regulatory environments. As an active member of the Home Builders Association and Valley Partnership, Bruce continues to influence the industry through leadership and collaboration.
Tags:Affordable HousingBuildforRentQ&A
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