April 23, 2024

NAIOP CRE Forum: Could We Use our Real Estate Skills to Make Workforce Housing Work?

We all agree we need Workforce Housing, and that conventional development costs require an end rent that is priced out of this market. What is the reality about construction and development costs that result in this mismatch? What are the programs our City, our State, and other Cities and States are trying, to make Workforce Housing affordable, and which of these programs do and don’t fit into the normal commercial real estate system, or are not workable from a construction cost perspective. Issues include:

  • Are construction costs, including permits and hook-up fees contributing to per unit development costs that price rental units out of the market?
  • The Wisconsin legislature created new loans for WFH: do they fit into the capital stack?
  • How would they be seen by a construction lender or underwriter? How and when would they be paid back?
  • Some States have tried to help develop WFH by eliminating single family zoning; others have tried to require more density; one State tried to put a right of first refusal, in favor of the State, on every multi-family property.
  • How would these efforts help or hurt development of WFH?
  • What types of government assistance would be useful? NAIOP’s efforts to encourage the City of Milwaukee to change its TIF policies; donation of underused land? Condemnation? Grants for extension of utilities?

The Main Takeaways:

1. Economic development and job creation require nearby affordable housing: Housing development IS economic development.

2. We have severely underbuilt new residences and lots in the last few years and the gap is growing.

3. The reason for the gap in creating new households is complicated: Some is a result of increased cost of construction materials and labor and NIMBY fears, but labor shortages and the length of the approval process are large factors.

4. Many City and State governments have adopted, or attempted to adopt, laws to ease the problem, but many of these laws do not speak to the real underlying issues.

Our presentation started a discussion among contractors, developers, and public officials, which will continue.

Tuesday, April 23, 2024

4:00 - 6:00 p.m.

Michael Best Milwaukee Office
Suite 2500
790 N Water St
Milwaukee, WI 53202

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