Affordable housing is makingall of the headlines these days. Affordable housing is differentthan workforce housing because it serves a low-income segment ofthe community and is often built with LIHTC. While the investmentpool in this market segment is small, recent demand for affordablehas caught the attention of institutional capital. However, thereare limited opportunities for institutional buyers to gainsignificant market share in this space.

"The players that have been in the business for several years,of which there are three of four, have been the same. We have seensome bigger portfolio sales over the last two years, which hasallowed new entrants to take some big bites into affordablehousing," Jonathan Needell, president and chiefinvestment officer at KIMC, tells"That obviously affects pricing and cap rates, and probably alreadyhas. It isn't across the board, though. It is mainly in downtown,higher density areas where the check sizes are big enough."

The reason institutional entrants haven't made a big impact islargely due to scale. Affordable properties are generally smallerthan market-rate apartment projects. "Most of affordable housing isbuilt in 100 to 200 units, so you really need to aggregate theportfolio," says Needell. "If you go on the HUD website, you candownload every owner of a LITEC property. A tremendous amount of itis 100 units and the vast majority is under 200 units."

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Kelsi Maree Borland

Kelsi Maree Borland is a freelance journalist and magazine writer based in Los Angeles, California. For more than 5 years, she has extensively reported on the commercial real estate industry, covering major deals across all commercial asset classes, investment strategy and capital markets trends, market commentary, economic trends and new technologies disrupting and revolutionizing the industry. Her work appears daily on and regularly in Real Estate Forum Magazine. As a magazine writer, she covers lifestyle and travel trends. Her work has appeared in Angeleno, Los Angeles Magazine, Travel and Leisure and more.