Commercial property realtors deal in more property than just shopping centers, frequently working with commercial developers of multi-unit rental housing buildings and other housing projects. One of the more significant needs seen by commercial realtors today is for workforce housing. With many urban areas experiencing a lack of workforce housing, the simple answer might seem to be increased investment in new construction for this market; however, that idea is not without problems. Experienced real estate investors must look at all aspects of a deficit in employee housing and come up with an approach to maximize existing accommodations.
What Is Workforce Housing?
Workforce housing means any rental or privately owned living quarters such as homes, apartments that are affordable to the majority of the current workforce; based on those who earn 60 percent or more of the local median income and live closer to cities and metropolitan areas. The demand for residential property in such areas has traditionally been strong due to the convenience of its location to many employers and its affordability, meaning there are few homes sitting empty and rental rates continue to climb.
Lack of Workforce Housing
Current real estate trends indicate that because of economic reasons, more people are moving back toward the cities, further increasing the demand for workforce housing in such areas. Commercial property realtors suggest that with heightened demand, some rents are becoming out of reach for those who need housing, creating opportunities for investors to fulfill that demand. Unfortunately, the problem of demand cannot be easily remedied by simply building more units for a number of reasons.
Dealing with Increased Demand
Although the simple answer might be for real estate investors to start building, market experts see two main problems with this idea.
- Cost - New construction is expensive; It does not necessarily alleviate the need for more affordable housing for those seeking workforce level housing.
- Space - In many markets, there is a lack of building space for new construction; the space that is available may be prohibitively priced.
This is a topic being discussed in many cities as developers try to come up with the right solution to the problem. Commercial realtors need to creatively serve the needs of essential local workers and still come out ahead.
Many feel the answer to the dilemma lies in working with available resources in order to create the best options for a variety of income levels. This may include:
- Rehabilitating older residences and neighborhoods to make them more desirable.
- Building multi-unit rentals where there is land available.
- Repurposing buildings, a recent trend with promising results for investors.
Even though there may not be much demand for brand new, single-family homes due to building costs, experienced developers and investors are learning to see what is available to work with, then making the most out of those options as affordably as possible.
The increased demand for middle-income workforce housing will definitely test the creativity of commercial realtors and developers; fortunately, there are still plenty of positive investment opportunities available. As these development projects are underway, the added benefit is strengthening the local workforce economy as well as the demand for businesses in these areas. Interested investors and developers should work with experienced commercial property realtors who understand local trends and demands for workforce housing as well as what properties are available for development that could fill these needs!