The Spring 2026 IMN Build-to-Rent (BTR) Forum made one thing clear: the industry is navigating a complex period marked by policy uncertainty, uneven fundamentals, and an evolving capital markets. Conversations were defined by the interplay of new legislation, market softness, and the search for strategies as developers, investors, and capital providers assess the future of the BTR sector.
Legislative Uncertainty Looms Over BTR Activity
Much of the current hesitation in the BTR sector can be traced to pending federal and state legislation. Attendees expressed concerns around a proposed Senate bill and new laws in states like Georgia and Arizona, which could cap corporate ownership and introduce required hold periods for rental properties. One of the most debated topics was the inclusion of the seven-year disposition rule stating that BTR communities with fewer than 3 attached units are subject to a disposal requirement within 7 years of construction. The lack of clarity extends to whether certain projects will be “grandfathered” in—and at what level, whether at the sponsor or title level—which is delaying investor commitments and complicating underwriting.
Challenging Fundamentals in Key Markets
Apart from legislative risks, fundamentals in major Sunbelt rental markets are also testing developers and investors. Conference panelists noted that high levels of new supply in cities such as Dallas, Atlanta, and Huntsville, combined with slower job growth, have resulted in deeper rent concessions. It is now common to find properties offering two-and-a-half to three months of free rent on new leases, with even up to a month free on renewals. These conditions make it challenging for new projects, especially in suburban and non-stabilized areas, to achieve expected lease-up velocity or meet pro forma rent targets.
Despite recent softness, there were early indications of improvement heading into the spring leasing season. Stabilized assets in strong infill locations are attracting the most investor demand, proving more resilient compared to assets located in suburban settings or projects still in lease-up. As noted by multiple speakers, “green shoots” in rental activity suggest that the worst may be behind, but uncertainty remains high.
Strategic Shifts Among Developers and Investors
In this uncertain environment, market participants are adjusting their investment strategies in several ways:
- Many developers are taking this opportunity to entitle land, redesign unit mixes, and optimize product types. For instance, some developers are shifting their focus from duplexes to townhomes and quadplexes. This not only helps achieve higher density and manage costs but may also comply more easily with potential new legislative restrictions.
- Sponsors are broadening their acquisition criteria and looking beyond BTR development. Value-add multifamily, senior housing, and student housing are drawing attention as platforms seek to diversify risk and tap into alternatives with strong demand characteristics.
- The volume of distressed opportunities is rising. Lenders and special servicers, having previously extended terms to avoid forced sales, are now bringing more assets to market. This is creating a pipeline of value-add investments for well-capitalized sponsors able to act quickly.
There is a pronounced flight to quality among capital providers, with the greatest emphasis on well-located, amenity-rich assets offering smaller, value-oriented units.
Capital Constraints and Transaction Volatility
Equity remains the scarcest resource, with deal flow slowing as capital partners delay investments pending legislative clarity. Several high-quality transactions have stalled or fallen through at late stages due to equity partners withdrawing or failing to assemble required funds. Even when debt is available, equity gaps often lead owners to hold or refinance rather than sell, especially as operating expenses and rent concessions depress pricing.
Cap rates for stabilized BTR assets have widened to five to five-and-a-quarter percent, and future deals are being underwritten even wider. Many participants are recalibrating expectations and focusing on locations that can deliver both steady leasing and long-term value.
Expect to see more recapitalization activity as investors attempt to reset capital structures this year. We anticipate existing sponsors and developers to bring in new LP equity to:
- Right-size capital stacks
- Extend hold periods into the next cycle
- Work through near-term supply and allow operations to stabilize
Poised for Rapid Restart
The overall sentiment at the conference was strategic discipline. While many deals are on hold, sponsors with flexible product strategies and dry powder are positioning themselves to move quickly as soon as regulatory clarity emerges and market conditions firm up. The period of pause is being used to advance entitlements, update designs, and monitor shifting fundamentals, ensuring that when the opportunity window reopens, market leaders will be ready.
As the BTR and rental housing market moves through this period of flux, it will be those who maintain patience, adaptability, and a focus on fundamentals and operating performance that stand to gain the most in the next cycle.
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