Experts are seeing an increase in the demand for workforce housing across the U.S., predominantly in the Southwest, Southeast, Midwest and Mid-Atlantic regions.
Experts are seeing an increase in the demand for workforce housing across the U.S., predominantly in the Southwest, Southeast, Midwest and Mid- Atlantic regions of the country. Stuart Zook, president of Monument Capital & Asset Management, Monument Capital Management and Monument Real Estate Services, took the time to discuss the drivers behind this movement — and how to successfully provide for this growing need. Zook has been with the Miami-based companies since 2005 and has acted as the key principal on all investments since 2012. He brings more than 35 years of experience in property and asset management to the table and is responsible for the overall investment and op- erational strategy of the companies.
Why has the demand increased for workforce housing across the country?
Driving this demand are a variety of factors including increased immigration to the U.S. Those who come to this country need to rent while they establish their credit. For some, renting may be only for a few years, but for most it is a long-term living arrangement.
Domestically, we see that as the economy recovers there is a shift in household formation where many adult children are now able to secure jobs after leaving college or high school and do not return home to live with their parents. These young adults do not have the income level to purchase a property or rent a luxury unit, and so this new wave of home-seekers are in need of affordable rental options.
Many others are simply unable to buy their own homes and therefore rent workforce housing out of necessity. Credit scrutiny remains high, and people cannot obtain lines of credit like they used to. Additionally, many people are still clearing their credit and dealing with the financial effects of the last economic downturn.
What is the outlook for the continued demand for workforce housing?
We will continue to experience a strong demand for workforce housing, certainly over the next 15 to 20 years as it has been well-documented that the homeownership rate in the U.S. will continue to decrease. Research on the topic also indicates that of the more than 20 million households that will form from now until 2030, more than half will rent.
What are the key elements for investors in viable workforce housing projects?
There are many favorable factors for investors to seek workforce housing properties. One very significant draw is that the demand is strong and growing, which results in high occupancy rates and increased value.
When evaluating a property, having a company in place that can effectively and efficiently manage the property is paramount. A good property manager will understand the needs of its residents and tailor their management strategy accordingly. When a property manager and ownership can meet these needs, it will result in a decreased turnover rate.
How does a property management company increase the project's value and ensure high occupancy?
A property management company must be diligent with maintenance and building upgrades to ensure increased value. It is advisable that unit upgrades be considered every seven years.
If a property manager can meet the needs of residents, this creates a sense of community. Not only does this make for a wonderful living environment for residents, but ensures a high occupancy rate, too.
Each building will be different given its location and residents, but what we have identified as common needs in the properties we own and manage include after-school care programs and evening English classes. A well-maintained property and residents who feel as though they are part of a community will ensure increased value as well as high occupancy rates.
What are some steps developers can take to achieve greater success with workforce housing construction?
When developers build workforce housing they should consider using durable materials and appliances. Often these properties experience considerable wear and tear and so it is beneficial to employ materials during construction that can stand the test of time.
Floodplains should also be devised that have less importance on the size of bedrooms, and more of an emphasis on ensuring larger family space. Ensure there is space for hosting events and programs to create a sense of community, including an ample-sized clubhouse on the grounds of the property is a must. We make sure that building this amenity is among our priorities.