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Developers are Building “Attainable” Housing — Without Subsidies
Multifamily developers have been grappling with the overwhelming demand for workforce housing units. One metric from the U.S. Census Bureau’s American Community Survey pointed out that close to 50% of American renters are classified as “cost burdened.” While the need for affordable housing is definitely there, the conventional wisdom has been that such developments don’t pencil out, not without some kind of municipal, state or federal subsidy.
However, according to a recent article published by the National Apartment Association (NAA), for-profit apartment developers are starting to produce more “attainable” or “workforce” housing units, without government subsidies. Some of the strategies being used to reduce the costs of workforce housing developments include the following:
Design standardization and bulk material purchases. Using the same designs on multiple developments has led to efficiencies among general contractors. And, bulk purchases, via national purchasing programs, helps keep costs in check, according to Continental Properties’ Jim Schoemer.
Building smaller units on smaller properties. Apartment units topping out at just under 400 square feet provide lower price points for tenants. Furthermore, the need for fancy interiors — such as granite countertops and full-sized appliances — goes away. “You don’t need many of them, because the units are smaller,” said Michael Zaransky with MZ Capital Partners.
Direct access to units. Developers such as Continental Properties have direct entryways to units, which eliminates the need to build and maintain non-rentable space or common areas in corridors and breezeways. It also increases on-site unit density.
The article also noted that, for the most part, workforce housing is a low-risk endeavor, given the extremely high demand for the product. “At the end of the day, these attainable projects reduce your risk,” according to Astor Cos.’ Henry Torres. “You know you’re going to be successful, because the size of your target market is so much larger.”
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