Institutional landlords pull out of rent control cities, sparking a build to rent boom in midsize metros

Institutional landlords pull out of rent control cities, sparking a build-to-rent boom in midsize metros

What happened

Large, institutional landlords have been quietly shifting capital away from cities that adopted strict rent controls and tenant protections, and that retreat is helping fuel a wave of purpose-built rental development outside traditional coastal cores. Developers and funds are redirecting billions into suburban and midsize markets where new product can be priced nearer to market rents and where zoning and incentives make construction more feasible.

The scale of the shift

The build-to-rent sector posted record completions in 2024, with roughly 39,000 single-family rental homes delivered nationwide, and an even larger pipeline under construction heading into 2025. In several Sun Belt and midsize metros the BTR pipeline now exceeds prior five-year deliveries, and national under-construction counts topped 110,000 units in recent industry tallies. That volume reflects both institutional capital chasing yield and smaller builders pivoting from for-sale housing.

Why landlords are stepping back

Institutional investors point to regulatory risk and enforcement uncertainty as a core reason for reallocating assets. Studies and investor commentary suggest that rent-control regimes and related municipal rules raise perceived investment risk, depress expected returns on redevelopment, and steer portfolio managers toward markets with clearer regulatory regimes. Municipal rollbacks and revisions of rent policies in places like Saint Paul underscore how volatile the policy environment can be.

Where growth is happening

Markets such as Phoenix, Dallas, Atlanta and a host of midsize Midwestern and Southeastern metros are now the primary recipients of build-to-rent capital, according to industry surveys and brokers. Sun Belt metros lead, but the most notable growth is in secondary cities where land cost, permitting timelines and local incentives produce faster underwriting. Institutional purchasing of for-sale single-family inventories also cooled in 2024, nudging capital toward ground-up BTR projects.

What this means for renters and cities

The surge in build-to-rent promises more professionally managed homes and amenity-rich communities, but it does not erase affordability challenges. New supply is concentrated and may not reach the lowest-income renters, while cities that rely on rent control to protect households risk losing long-term investment in new housing stock. Policymakers will face pressure to balance tenant protections with clear development rules that keep new rental supply flowing.