Lessors of Residential Buildings
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 52,400 lessors of residential buildings and dwellings in the US lease single-family homes, apartment buildings, and town homes. The industry includes owner-lessors and firms that rent real estate and subsequently sublet property to others.
Vulnerability to Trends in the Housing Market and Economy
The housing market is cyclical, and market conditions affect property income and values and the ability to collect rent.
Capital-Intensity of Operations
The residential owner-lessor business is extremely capital intensive.
Industry size & Structure
The average residential lessor operates out of a single location, employs about 6-7 workers, and generates $2.5 million in annual revenue.
- The residential lessor industry consists of about 52,400 firms that employ 362,100 workers and generate over $134 billion annually.
- The industry has a low level of concentration; the top 50 companies account for about 30% of industry revenue.
- Large firms with residential lessor operations include Essex Property Trust, Avalonbay Communities, Equity Residential, and Mid-America Apartment Communities. Some large firms are vertically integrated and operate as residential real estate developers.
- Despite the size of the industry, many large firms operate regionally.
Industry Forecast
Lessors of Residential Buildings Industry Growth

Recent Developments
May 18, 2023 - Slower Multifamily Housing Starts Could Benefit REITs
- Jitters in the regional banking industry could exacerbate a slowdown in multifamily starts brought on by rising interest rates and high construction costs, according to Bisnow. In the first quarter of 2023, residential construction starts declined by 29% compared to the same period in 2022, according to Dodge Data & Analytics. The failures of Silicon Valley Bank and Signature Bank, and later the seizure and sale of First Republic Bank, have chilled lending. Private developers often rely on regional banks for financing projects, and some industry experts expect tighter lending standards to slow multifamily housing starts. However, the slowdown in starts could benefit real estate investment trusts (REITs). Weaker starts could create room for REITs with apartment buildings to increase rents in the coming years. Additionally, REITs may face less competition from regional developers who are having trouble financing new projects.
- In April, multifamily rents rose moderately for the second time in a row, but there are signs the market could face some distress, according to Yardi Matrix’s most recent Matrix Multifamily National Report. The national average rent rose by $5 in April to $1,709, well below the robust gains seen in 2021 and 2022. Yardi Matrix expects modest rent growth for the remainder of 2023. However, industry insiders are concerned about potential headwinds, including the potential for an economic slowdown, tighter lending standards, high-profile bank failures, and the looming maturation of a significant number of multifamily loans. According to Yardi Matrix data, of the approximately $2 trillion in outstanding multifamily loans, about 15% of them are set to mature by 2025. These loans could mature into an environment that’s worse than when they were issued if current market conditions don’t improve.
- In the first quarter of 2023, there were about 14,000 single-family built-for-rent (SFBFR) housing starts in the US, down about 7% from the same period in 2022, according to National Association of Home Builders analysis of US Census Bureau data. However, during the four most recent quarters, 69,000 SFBFR homes began construction, which is up 17% compared to how many were built in the previous four-quarter period. While the historical four-quarter moving average market share for SFBFR is about 2.7% (1992-2012), SFBFR’s current share of the overall single-family market is about 7.5%. Single-family built-for-rent homes provide an alternative for consumers who want more space but are challenged by a lack of affordable housing inventory and downpayment requirements in the for-sale market.
- High interest rates and volatility in the banking industry have put downward pressure on demand for real estate deals involving multifamily buildings, according to The Wall Street Journal. Apartment building sales in the first quarter of 2023 reached $14 billion, down 74% from Q1 2022, according to a preliminary report by commercial real estate data firm CoStar Group. The decline in year-over-year apartment sales was the largest since a 77% drop in Q1 2009 during the subprime mortgage crisis. The multifamily market was a hotbed of activity during much of the pandemic as investors concentrated purchases on Sunbelt markets with relatively lax regulations and fast-rising rents. However, high interest rates and flattening rent growth have reduced investor appetite for deals. A pullback in bank lending has led to lower values for some apartment buildings, and landowners are unwilling to sell at reduced valuations.
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