One of the largest U.S. real estate brokerage firms is creating a national team to focus on the single-family rental niche that has had booming demand for much of the pandemic until investment began to ease this year.

Newmark’s Chad Lavender and Ryan Maconachy, both of whom have been working on healthcare and alternative real estate assets since 2019, are leading the new sales group to lure investment in single-family rentals. Brokers Leland Manning and Josh Francis will be part of the team that operates within Newmark’s multifamily capital markets group led by Jeff Day.

Several major brokerages such as Cushman & Wakefield and CBRE have already been focusing on the single-family rental sector under their multifamily umbrellas for at least two years.

Now Newmark’s move is formalizing the practice in its own business as institutional interest grows in single-family rental investment, Lavender said in a statement. Newmark said institutional investors have devoted more than $100 billion in funds to single-family rentals over the past several years.

Single-family rentals surged as people moved out of urban apartments after the pandemic hit, shifting to suburban rentals where they could have a yard and more space to work remotely. Manning said that “with increased rental housing demand, renters are seeking more space and the privacy of a detached home without the demands of a mortgage, especially considering interest rate increases."

Rents rose and large institutional investors started buying up single-family rental properties or invested in firms building homes to rent.

Blackstone Group, Brookfield, Ares Management and KKR are among a slew of private equity firms and institutional investors that invested in the rental market for single-family homes. A recent report from data firm Yardi cited MetLife Investment Management research that showed institutional investors own about 700,000 single-family rental properties, or 5% of the 14 million single-family stock.

Even so, rising home prices combined with slowing rent growth and rising lending costs this year prompted the biggest industry players to pull back on buying new properties, making it more important to try to spur investment in single-family rentals.

Invitation Homes slowed buying through the year, reporting in October that it bought 559 homes in the third quarter compared to 1,543 in the fourth quarter of last year. Tricon Residential, one of the first major entrants in the business, said in a November earnings call that it's slowing purchases.

But Gary Berman, CEO of Toronto-based Tricon said, “We now have nearly $3 billion of dry powder” and will “lean in and deploy that capital when the time is right.”

As existing sales slowed, build-to-rent picked up steam this year to more than 25,000 rental homes, according to Yardi. The firm projects the number of new build-to-rent units that will open this year could easily pass last year’s 7,705.

That market has lured homebuilders, apartment developers and student housing developers. Charlotte, North Carolina-based apartment developer Crescent Communities launched a joint venture with investment firm Pretium last year and started building.

Atlanta-based apartment developer RangeWater is another that has entered the fray. Athens, Georgia-based student housing developer Landmark Properties kicked off its first build-to-rent community in Huntsville, Alabama, in September.