Greystar, Others Address US' Need for Attainable Housing

The US is enduring a severe shortage of affordable housing alongside an era of record-high inflation, according to a recent report from Moody’s Analytics.

“What’s more, rental rates sped past wage growth, causing financial distress to Americans paying higher rates without a higher income to match,” writes its analyst David Caputo.

He said that finding and maintaining affordable rental housing remains a challenge, especially for the nation’s lowest-income renters who already struggle with affording basic necessities.

“A combination of factors during the pandemic, including affordable units being converted to market rate, resulted in an 8% decline, or loss of over 500,000 affordable units for the extremely low-income renters,” according to Caputo.

“Any reduction in this type of housing will worsen the existing shortage and exacerbate the hardships faced by low-income renters.”

Greystar Real Estate Partners recently announced the launch of a new dedicated brand, Ltd. by Greystar, that will exclusively focus on Greystar delivering more attainable housing opportunities for key populations affected by the lack of rental options in the United States.

The homes will have a sustainable, modular construction, be built off-site, and be offered at an attainable price point.

Greystar currently has five Ltd. branded projects underway, with approximately 1,600 units expected to come online in the next 18 months. The first Ltd. community, Ltd. Med Center, in Houston, has 378 units now in lease-up.

Construction is underway in three other markets.

To achieve this goal, Ltd. guarantees not to increase rents by more than the greater of CPI or 3%, providing “certainty of housing” for existing residents, according to a Greystar release.

“Over the course of my career, I have seen the incredible need for attainable housing options across the United States,” said Bob Faith, Founder, Chairman, and CEO of Greystar, said in a release.

Scott Berka, Senior Managing Director, Brand and Customer Experience, called it a “game-changer for renters who want to live in a Greystar-managed community and for an industry that needs more housing supply,” in prepared remarks.

Jeffrey Woodin, Centennial Bank, Commercial Banking Team Lead, tells GlobeSt.com that his firm provided a $54.3MM construction loan to GS Naples Owner LLC, owned by Greystar.

The construction loan will allow Greystar to initiate the construction of Marlowe Naples, a 216-unit, garden family-style multifamily project in Naples, Fla.

This asset plans to set aside 43 units for affordable housing for individuals who earn 50% to 80% of the area’s median income. Ground clearing and construction are scheduled to begin June 1, and the first units are expected to be available to rent in August or September of next year.

“Creating lasting relationships with clients is of the utmost importance as a community-focused bank, especially when other banks are embarking on a lending moratorium,” Woodin said.

Alexander DeGood, partner, Cox, Castle & Nicholson, tells GlobeSt.com that he thinks the Greystar model would be an attractive product, particularly in markets where there has been upward pressure on rents, either due to constrained supply, population growth, or both, and where there are no local rent increase limitations.

“In many areas, and particularly in California, there has been an increasing focus on protecting less economically secure tenants from significant rent increases and eviction,” DeGood said.

“To the extent these projects require entitlements, I think that decision-makers would find the rent guarantees a very positive feature and it would aid in a project securing necessary approvals.”

Matt Do, Managing Director, Government and Education, JLL, tells GlobeSt.com that public/private partnerships are making a difference.

“Affordable housing continues to be a top public sector priority,” he said. “With the scale, complexity, and need, creative approaches are increasingly being sought to deliver net new affordable homes – leveraging of public assets, public financing tools, new legislative authorities and funding, and, importantly, more solutions with the private sector. These solutions include corporate funding and deeper alignment with traditional multifamily housing developers and investors.”

Among the examples, The City of Atlanta and Invest Atlanta are converting the 2 Peachtree Street tower and the adjacent property, 14 Marietta Street, into a vibrant residential/mixed-use project, with a focus on affordable housing, to integrate seamlessly with the city and other transformational developments now underway in Downtown Atlanta.

The City of San Diego is undertaking the redevelopment of 48.5 acres centrally located in the City’s Midway District. The city is proceeding in accordance with California’s Surplus Land Act, which prioritizes excess public land for affordable housing. The city’s development partner is planning a mixed-use site with over 4,000 housing units, including significant affordable housing.

The State of California Department of General Services will transfer ownership of the land and property in downtown San Jose – a three-story, 134,000 SF State of CA office building – to San José State University to facilitate the creation of up to 1,000 units of mixed-income, high-density workforce housing, half of which is planned to serve SJSU faculty, staff, and graduate students.