A development perspective on creating workforce rental housing proximal to major employment centers

Abstract

Middle-income renters in major cities across the United States are facing an affordability crisis. Many of them earn too much money to qualify for rental assistance programs, but don't earn enough to comfortably afford market rents. Developers recognize the need for quality workforce housing close to major employment centers but have been unable to deliver enough projects to satisfy demand. Population growth, urbanization, and low homeownership rates are just a few of the macroeconomic trends that are driving up the demand for rental housing and causing market rents to rapidly appreciate beyond reach for the middle class. Rising construction costs as a result of government regulation, a shortage of skilled construction labor, and foreign trade policy make the production of workforce housing even more challenging. With a shortage of middle-income subsidy programs at every level of government, developers must exhibit creativity if they wish to build or preserve workforce housing. This Thesis explores the confluence of forces and factors that make it challenging to build new workforce housing and to preserve the existing stock. It then assesses subsidy programs at different levels of government and market-based solutions that developers can add to their toolkit. Three case studies from different parts of the country are used as examples to show how developers can overcome the obstacles and use the tools at their disposal to create workforce housing. Drawing upon the preceding analyses and discussions, the Thesis concludes with a series of recommendations that developers can employ to make workforce projects more economically feasible.