The COVID-19 epidemic has exacerbated the dire need for affordable housing and labor in most parts of the country. In South Florida, an area known for a developer appetite for luxury developments, affordability was a thorny issue long before the pandemic hit. To comply with the current climate, developers must invest in the construction of subsidized housing, according to Nelson Stabile, director of Integra Investments.
The developer of affordable and market-priced collective housing in South Florida expects demand for apartments in suburban markets to increase as individuals seek to relocate on the basis of attractive prices. In the interview below, Stabile discusses investor sentiment and also discusses the impact of the pandemic on his company’s plans for delivery soon.
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What can you tell us about investor sentiment in South Florida regarding the affordable housing market and market-priced multi-unit housing?
Stable: The appetite for low-income housing tax credits, which is crucial to our affordable developments, remains strong, although there are indications that LIHTC’s trustees and investors are increasingly selective in the current environment. LIHTC pricing for new offerings – which weren’t subscribed before the start of COVID-19 – is currently somewhat elastic, which we believe will be temporary as the world recalibrates.
As for market rates, investor sentiment remains positive. As multi-family rental collections have shown strength compared to other asset classes, an appetite to invest in space is still present today.
Is it harder now, in today’s economic environment, to build affordable, market-priced communities in South Florida?
Stable: For affordable developments, we did not see COVID-19 having a material impact on the progress of the authorization or closure of funding for our projects. In fact, we have been encouraged to continue working with licensing authorities, government funding agencies, our non-profit partners, project design and legal professionals, and the financial institutions that are our partners. . All of them are working diligently and focused on our common goal of building affordable, high-quality housing, despite the various adjustments made to day-to-day operations.
When it comes to physical construction, Integra Investments has implemented a series of new protocols to ensure the safety of our construction team and the community, but we have not experienced any significant delays.
How has the coronavirus epidemic impacted your multi-family projects?
Stable: Integra’s project timelines remain on track across its portfolio, with construction underway amid the pandemic. Thus, we are fortunate not to have felt the generalized negative impacts because concrete and steel, among other construction products, remain regularly available. However, suppliers serving the outsourcing industry are experiencing delays in their assembly plants. For example, due to mandatory closings, we experienced longer delivery times for device deliveries.
Does Integra undertake initiatives to support people in need of affordable housing?
Stable: To respond to the current housing crisis, our affordable development division, Interurban, continues to focus on increasing the supply of high quality subsidized housing at affordable rent. To close the development finance gap, a combination of programs including LIHTC, Local Development Grant, HUD Housing Grant, and Local Zoning Incentives are crucial to our supply of high quality housing at affordable rents.
By the end of July, 390 fully affordable and senior housing units in Miami-Dade will be under construction through our Intercity division, funded by LIHTC and other funding from government agencies. Additionally, at the end of this summer, Bella Vista, a market rate multi-family development in Lauderdale Lakes, Florida, will be delivered to market.
Tell us about your Bella Vista project in Lauderdale Lakes.
Stable: Bella Vista is a market-priced 315 unit multi-family development in the heart of Broward, ready to provide housing for the workforce the community needs so badly. Understanding the market needs and demand potential, given the prime location and fundamentals of Bella Vista, Bank Synovus provided the project financing to develop this quality housing product. Pre-leases remained stable, with dozens of guaranteed leases and occupancies expected for July.
Tenants can choose from one- to three-bedroom residences averaging 850 square feet, with Class A finishes. A wide range of community amenities will be available, including a business center with one room. conference room, playground, fitness center and several entertainment areas, such as a pool deck and clubhouse.
What does this project mean for market-rate units in suburban markets far from the urban core?
Stable: Serving as a central point of connectivity to the Broward County community, with access to major thoroughfares, Bella Vista is located on Oakland Park Boulevard, between the toll freeway and Interstate 95. The conventional garden-style development of three floors, with private garages available, mimics the style of a single-family home. As individuals relocate from the urban core due to the effects of the pandemic, Bella Vista offers an untapped product that merges the characteristics of a single-family home with Class A multi-family amenities, allowing residents to experience the best of both worlds, just minutes from the heart of Broward.
How did you finance this project? Is it difficult to get the funds for construction at this time?
Stable: The project was funded without any government subsidy, with all funding coming from private capital and a conventional construction loan. The most critical aspect of financial sustainability is to arrive at an appropriate cost base, taking into account both the price of the land and the cost of construction. While both had risen steadily prior to the pandemic, it appears land prices and construction costs are flattening right now, which will hopefully lead to more housing where communities need it in the future. the future.
What steps can developers take to support housing stability?
Stable: The nation’s need for affordable housing and labor has increased due to the long-term economic impact of the pandemic. Without a new product, housing shortages in neighborhoods are further amplified as household occupancy rates approach capacity. To address the significant lack of supply, developers must continue to work to bring products to markets that are not overly saturated. It is crucial to work closely with the municipalities concerned to ensure that planning ordinances are aligned with the demands and needs of each market. Outdated planning and zoning regulations affect the development process.
How do you think rental rates will develop in the future?
Stable: Unemployment rates will play an important role in how rental rates behave and react in the future. Overall, we expect positive net increases in rental rates, with moderate growth for the Labor Housing product given the price. The projected increases will be specific to each market and based on regional demand.
What is your forecast for the South Florida suburban multi-family market?
Stable: I predict increased demand for suburban housing products with high market scores. While social distancing measures remain, a good part of our population will give up the urban core for less dense communities, with large green spaces. Developers and users will place increased value on outdoor, live working environments within walking distance of parks, golf courses and bike paths. As individuals continue to work from home, internet speed and accessibility to different areas of a residential project will become the most valued amenities.