AvalonBay Communities, one of the largest U.S. apartment landlords, has made its first major investment in the growing build-to-rent (BTR) sector. The company purchased Avalon Townhomes at Bee Cave near Austin, Texas, for $49 million, marking its entry into the rapidly expanding market for suburban rental communities that resemble single-family homes.

The Bee Cave development includes 126 townhouses, featuring private yards, garages, and premium amenities such as a pool. With an average rent growth of 11.6%—outpacing Austin's broader rental market—AvalonBay aims to capitalize on surging demand from millennial households and an undersupplied housing market.

AvalonBay's BTR strategy will focus on suburban areas within its existing footprint, targeting regions like Texas, North Carolina, and Colorado. Future plans include a mix of acquisitions and in-house developments, with projects designed to integrate townhomes and single-family detached homes in larger communities.

The BTR sector has attracted significant institutional interest, as these properties often outperform traditional multifamily assets in rent growth and yields. Despite risks from supply surges and regulatory scrutiny, AvalonBay views its purpose-built, contiguous BTR communities as a critical solution to the U.S. housing shortage while diversifying its portfolio.