Had the absolute pleasure of attending
@InterFaceGroup SoCal Affordable Housing Conference, here are the top ten talking points that stuck with me:
1. There is a solid tax rate appetite in the market for LIHTC projects. With companies and institutions reaching a point of stabilization with cost of debt coming down, the demand for tax credit investing is increasing incrementally after a downtick during COVID-2023.
2. Modular is gaining significant popularity as companies continue to refine 'maximally livable, maximally efficient' units.
3. "Pre-construction is the new construction phase." - Justin Stewart, Synergy Inc. Direct, consistent, and early communication across all verticals (lender, city, architect, broker, interior) is increasingly vital.
4. ED1 has attracted significant new, private equity to the AFF housing space. While this is a no-brainer and is considered a great move in the right direction, older AFF housing developers lamented at the cut in land inventory being bought up by newer players.
5. Land is slated for a value recovery. Demand is ramping up with cities realizing that AFF housing is not the only driver affecting overall affordability. Authorities are negotiating fresh incentives to revitalize market rate.
6. Local funding, incentives, and municipalities have never been more bullish on the affordable element. Cities, states, and authorities are trying harder than ever to partner with seasoned developers to see projects to completion.
7. Construction and operating expenses are through the roof (big surprise). My favorite quote came from Christopher Johnson, Related California "The best time to build was yesterday, and it's going to cost more tomorrow"
8. Depending on the niche, service providers (counseling, therapy, health services, etc) are penciling around $3,500/unit/year on 100 unit buildings. All major operators shook their heads in agreement.
9. RFP's are not efficient, and a good portion of City partnerships are actually formed with direct and persistent communication with authorities. Their heads are spinning but they are itching to get more housing online.
10. Most city partnerships ask for much more than just affordable housing. Depending on the capital stack, affordable projects now include building a new city hall with housing, building a new library with housing, building city-leased retail mixed-use (thanks Ontario), and more. Being open to suiting community needs and policies guides capital toward the project.
Overall it was incredibly refreshing to hear the renewed sense of optimism across the board. Developers are starting to come back to the table. Land values are low. While costs continue to increase, the decreasing cost of debt is opening new opportunities to get back to work.
My team and I just listed two incredible 10k-20k SF sites, priced to sell. We have a great current inventory of development deals ready to go. We have a large pipeline of deals that are coming soon. DM me and let's get building!! 🤠🏗️