Investors are Finding Unconventional Ways to Fill Void in Affordable Housing
Lack of sufficient affordable housing has been an ongoing issue in the US for decades. So it’s no surprise that with the added economic instability caused by the COVID-19 pandemic, the affordable housing shortage has increased.
According to the National Low Income Housing Coalition, an estimated 7.2 million more affordable housing residences are needed. And the current state of housing may only be the start of the COVID-escalated crisis. A recent Bloomberg article highlighted a concern in the industry that a wave of residential evictions could be on the horizon, and government budgets could be cut even more.
However, now more than ever, developers and investors are finding more alternative solutions to get affordable housing in place where it’s needed the most. A popular trend that, while not new, is growing in popularity, is converting properties not originally designated as affordable housing into affordable housing.
The US government has taken notice of this as well, with HUD Secretary Ben Carson stating recently on Fox Business that vacated commercial spaces – which will likely increase with the growing trend of companies having employees work from home or remotely – could be a viable solution to filling some of the shortfalls in the housing crisis.
“One of the interesting things we’ve learned through this crisis is that tele-working is very effective. I don’t think it will ever go back to the way it was before,” Carson said. “That’s going to free up a lot of commercial space, which can be converted to affordable housing to take some of the pressure off. We are very much looking at that right now, looking at ways to be able to facilitate that transformation.”
In this transaction, Zocala Community Development is converting a former office building in Lakewood, Colorado into a 218-unit adaptive-reuse development that will feature 10 studio, 165 one-bedroom, and 43 two-bedroom units. A total of 208 of the units will be available to households at or below 60% AMI, with the remaining 10 being available for households at or below 50% AMI.
There are other examples occurring across the US where property owners are converting an array of non-residentially zoned buildings as well, including hotels and retail properties. On a past episode of Mission Control – The Bellwether Enterprise Podcast, John Greenan of CitySquare Housing described how their company aims to convert shipping containers into tiny home residences to house the homeless.
This will certainly be a trend to watch as the long-term economic effects of the COVID-19 pandemic progress into 2021.