Huge challenge for commercial real estate industry

By Angela Azmitia, from Related Midwest

Reconciling increased urbanization with the growing unaffordability of city living is one of the biggest challenges the commercial real estate industry faces. Not providing enough quality, widespread affordable housing and community resources in economically diverse locations will mean unattainable housing for many, an increase in homelessness, gentrificationrelated displacement, and limited upward mobility.

As the affordable leasing director for related management, I see firsthand the repercussions of our city’s limited options. Individuals and families wait as long as 20 years for subsidized housing and tax credit options with narrow bands of afforda- bility that make it difficult for individuals to qualify.

According to the National Low Income Housing Coalition, in the US alone there is a current shortage of more than 7 million homes for our nation’s over 11 million extremely low-income families. Assuming the move towards cities will continue due to economic, climate, and conflict motivations, 80–90% of the world’s population will be living in, or in direct proximity to, urban centers by 2100.

A consequence of increased urbanization and sustained income inequality means there will be more demand for diverse housing and household needs — demands that the CRE industry may not be ready to meet. The development of residential real estate as a mainstream investment sector has had a direct

Angela Azmitia

impact on the global housing market causing inflated house prices, affordable housing shortages, inflexible housing stock, and underserved communities in need of economic investment.

Who is responsible for providing the diverse array of housing options needed — our public or private sectors? What should we, as an industry, be lobbying for? How can we build better investments to serve our communities? How does CRE, as an industry, further its efforts to create positive change? Below are examples of what it would look like to build community needs into our future development strategies.

Integrate principles of good density into future developments, and establish mixed-use, well-connected environments with high-quality placemaking.

Revitalize existing urban centers to offer supportive services (financial literacy training, access to healthy food, gyms, etc.) with input from locals and community leaders.

Incorporate rent-controlled and privately funded subsidies into mixed-income property metrics that can target low-income households relative to the federal poverty threshold.

Attract impact investors looking for measurable economic returns by investing in social impact methodology.

Lobby to incentivize construction of affordable housing and rezoning for multi-family properties in areas where AMI is over 100%.

Increase development of SRO housing in areas that can provide economic mobility to residents.

Set goals as an industry to bridge cross-functional gaps between public and private sectors to make sure housing needs are being met.