Monumental Demand for Affordable Housing

CHICAGO—Berkadia's affordable housing group recently negotiated four sales totaling more than $30 million for four affordable housing properties located across the Midwest and company officials say it helps show that even though the US economy may have escaped the recession, its lingering effects have increased the need for affordable housing, and in turn, many buyers now see these properties as solid investments. 

“The market is exceptionally strong for affordable housing communities, both in terms of renter demand as well as investor interest for available opportunities on the market,” Eric Taylor, a senior director in Berkadia's Detroit office, tells GlobeSt.com. “Persistent wage stagnation, coupled with the lack of middle-income job creation following the Great Recession has resulted in a monumental demand for rent-subsidized and income-restricted housing. Almost every deal that comes across our desks for underwriting is at or near 100% occupancy.”

Taylor and managing director Aaron Hargrove of the Oklahoma City office just closed the $11.3 million sale of King's Crossing and Tara's Place apartments, a 184-unit development located at 1710 E. Northfield Blvd. in Murfreesboro, TN, just three miles from the downtown and less than three miles from Middle Tennessee State University. They also negotiated the $10.95 million sale of the 160-unit Waterview Apartments, located at 1300 Waterview Circle in Hendersonville, TN. The buyer of both properties was Dominium of Plymouth, MN, and the seller and original developer of both properties was T&R Properties of Columbus, OH.

“The buyer was attracted to the properties' prime locations in Nashville's submarkets and the value-add opportunity through significant rehabilitation and long-term preservation,” says Taylor.

And earlier this summer, Taylor, Hargrove, senior director David Walstrom and director Jason Krug of the Detroit office also negotiated the $4.25 million sale of Arbor Crossings, an 18-unit property located at 834 Sheridan Rd. in Muskegon Township, MI, to New York-based Read Property Group. The seller was Sterling Group, Inc. of Mishawaka, IN. Built in 1995, the property is less than four miles from downtown Muskegon and less than two miles from Muskegon Community College.

In addition, Taylor, Hargrove and senior director Phillip S. Brimble of the Kansas City office brokered the sale of Northeast View Apartments, located at 222 Garfield Ave. in Kansas City, MO. The buyer was Trinity-Northeast View, LLC of Chicago, and the seller was Kci-Northeast View, LLC of Coronado, CA. Built in 1972, the 137-unit property is less than three miles from LEGOLAND Discovery Center and two miles from downtown Kansas City.

“There are a wide range of investor types pursuing affordable housing opportunities with varying motivations,” says Taylor. “The investors competing for the same offerings range from non-profit, affordable housing preservation groups to conventional market-rate converters. There is a significant imbalance of current opportunities on the market and the number of investors pursuing those assets, leading to competitive situations for all offerings we are presenting to the market.”