Multifamily news roundup: January
Each month, Common’s real estate team will be rounding up the most relevant news from across the multifamily housing industry. In January, we saw a large push from cities and corporations for affordable housing, while other operators and short term rental companies began to feel the effects of the Covid-19 pandemic.
As the United States’ housing crisis continues, city governments are looking for ways to both create and preserve their affordable housing supply. In Charlotte, North Carolina, where the population grows by 120 people each day, the city created The Housing Impact Fund in partnership with local developer Mark Ethridge. The $58 million fund is dedicated to buying workforce housing and preserving the properties while keeping rents affordable.
Does COVID-19 mark the end of big cities? Not quite, but many cities that were once homes to large workforces, are now seeing their populations move to more affordable cities with a greater lifestyle match. This piece in the New York Times focuses on the mass exodus from San Francisco, most notably to Austin, Texas. With remote-work on the rise, we can expect to see many tertiary cities see an increase in both population and economic development.
In Mid-January coliving company Quarters filed for bankruptcy. The company, which once called itself the largest global operator of the shared living concept, had 8 properties in New York City, Washington, D.C., Philadelphia and Chicago. Quarters faced financial difficulties due to the pandemic and its Master Lease agreements with owners, wherein Quarters leased apartments from the building owner and then subleased the units to individual tenants, filings say.
The short term rental industry has been greatly affected by the COVID-19 pandemic, and many businesses that once seemed promising pre-coronavirus might not come out the other side. Similarly to Quarters, short term rental companies used master lease agreements to rent out apartment blocks and then rent units to travelers for days at a time. Companies using these master leases have faced a similar problem with their business model as WeWork has in the office sector: long-term liabilities against short-term revenue streams. As travel rapidly declined in March, swaths of these apartments are now returning to the standard multifamily market.
It’s not only cities that are looking to create more affordable housing. Major corporations also have a stake in making sure the markets they call home are accessible to low- and middle-income families. Amazon is pledging to invest more than $2 billion over the next five years toward affordable housing in Arlington, Puget Sound and Nashville where it has major operations. The first investment of more than $567 million will go toward 1,300 affordable apartment units near “HQ2,” Amazon’s new Virginia headquarters, and up to 1,000 apartments near its Seattle, Washington headquarters.