Private equity firms have become significant players in the apartment market across the United States, with nearly a quarter of apartment units in the Tampa Bay area under their ownership. Recent data released by the Private Equity Stakeholder Project highlights this trend, revealing that private equity giants such as Blackstone, Greystar, and Starwood Capital have acquired approximately 8,200 apartment buildings containing 2.2 million units nationwide. This figure represents about 10% of all apartment units in the country, with nearly two-thirds acquired since 2018.
Low interest rates during the COVID-19 pandemic provided a strategic opportunity for these firms to expand their market share. The business model of private equity firms focuses on maximizing profitability, often aiming to resell properties at higher values. The Sunbelt region, including Texas, Florida, California, Georgia, and North Carolina, has been particularly impacted, with over half of these units located there. The Tampa-St. Petersburg-Clearwater metro area notably ranks seventh in the nation for concentration of private equity-owned apartments.
In Tampa Bay, rents surged by 49% from 2019 to 2023, raising concerns about affordability, as many residents are now rent-burdened, spending more than one-third of their income on housing. States with weaker tenant protections and growing populations are particularly attractive to private equity firms, enabling them to exploit rental demand and increase prices.
Additionally, several private equity firms face lawsuits for alleged price-fixing, utilizing the Real Page software to set the maximum rent prices, often leading to rent hikes. Reports also associate private equity ownership with neglected property maintenance and aggressive eviction practices.
The influence of private equity extends beyond apartments, as these firms are also purchasing single-family homes for rental purposes. An investigation by the Tampa Bay Times reveals that large corporations, often backed by private equity, own about 117,000 homes in Florida, including 27,000 in Hillsborough, Pasco, and Pinellas counties. Complaints from tenants have included issues from mold to faulty plumbing and air conditioning.
The buying spree spanned from 2020 to 2022, corresponding with significant population increases in Sunbelt states. Although acquisitions slowed in 2023 and 2024 due to rising interest rates, activity has recently picked up again, potentially indicating another opportunity for private equity firms amid economic uncertainty.
The Societal Shift
- The substantial increase in private equity ownership in the housing market could lead to higher rents, affecting affordability for many residents in areas like Tampa Bay.
- With private equity firms prioritizing profitability, there is a potential decline in property maintenance and tenant support, impacting the quality of living conditions.
- Legal disputes over alleged rent price-fixing could influence future regulations and policies, potentially offering more tenant protections.
- The trend of renting single-family homes under corporate ownership might reshape neighborhood dynamics, with potential impacts on community engagement and cohesion.
- The ongoing interest and investment by private equity firms in real estate could influence property values and availability, affecting the overall housing market landscape.
