Why Affordable And Senior Housing Properties Are Extra Hard To Fill Right Now
Developers working to lease up senior housing projects and affordable buildings during the coronavirus pandemic are facing challenges that their market-rate counterparts are not.
Urban Atlantic Managing Director Vicki Davis, whose development firm has many affordable housing projects in its 6,000-unit portfolio, said the coronavirus has made executing affordable housing leases especially challenging.
Government regulations require the disclosure of documents for affordable renters that market-rate tenants don't have to produce, and collecting those documents has been difficult during the pandemic, Davis said.
"It's a federal requirement to have a paper trail for everything. I find it personally very obnoxious," Davis said. "Paperwork is probably the biggest pain point in affordable leasing and management, and it's hard on the residents."
Davis, speaking Tuesday on a Bisnow webinar, said she has had Urban Atlantic's management staff visit its senior affordable tenants to collect their documents in a safe way, so they don't have to leave home and risk contracting the coronavirus. But she said she hopes to see local and federal changes that allow the documents to be shared digitally.
"The paperwork demands are so onerous," Washington said. "It's onerous for the residents, management staff and various financing entities. I think one of the nice results to come of this situation can be more automated records that can be maintained electronically."
Senior housing projects also face lease-up challenges related to the older population's higher vulnerability to COVID-19, as they may not want to tour properties or move during the pandemic. Davis said Urban Atlantic has faced this hurdle at its Parks at Walter Reed development, where it built 200 affordable units for seniors and veterans.
"That one is really difficult because you have to be very careful with seniors, so it definitely has had an impact on the lease-up," Davis said of the Walter Reed project.
Davis said market-rate leasing and condo sales have been strong during the pandemic, as prospective tenants and buyers have shifted to virtual touring. Urban Atlantic is working with Urban Pace to sell the units at The Brooks, part of the Walter Reed development, and Davis said it has continued to sell condos during the pandemic.
"There are a lot of virtual tours going on," Davis said. "We've sold condos without anybody ever stepping inside the sales office, and we have leased a significant number of units across our portfolio through virtual tours.
Washington said he completed leasing at a senior project in February and is "lucky" to not have any actively leasing senior housing buildings today.
NDC has used virtual tours in the lease-up of the former Howard University dormitories it, in partnership with Urban Investment Partners, redeveloped into apartments, Washington said. He said virtual tours have been effective and renters appreciate the ability to compare several buildings without driving across town. But he has seen an overall drop in leasing demand.
"In some ways, it has been challenging in that human nature is that people will be less likely to move during these times," Washington said. "People who need to move are moving, but people are staying in place, so I think that has affected the spring season when you see a lot of leasing."
Urban Atlantic and NDC each have multiple D.C.-area projects underway that have continued construction during the pandemic, and they both broke ground on new developments in recent months.
The developers said they have worked with their general contractors to implement safety precautions such as using personal protective equipment and hand sanitizer, staggering shifts and checking temperatures.
Washington said he has two additional development deals he hopes to close this year, and he said his financing partners have remained confident in backing new multifamily projects despite the economic crisis.
"There has been more scrutiny in underwriting, asking us for bigger contingencies on the construction side than you typically would have and looking at things more carefully," Washington said.
Davis said now is an attractive time to close financing deals because of the low interest rates, and she said Urban Atlantic has been working to refinance multiple existing properties.
She said her company closed a deal earlier this month to refinance the 179-unit project it delivered last year in the Capitol Riverfront neighborhood. CitiBank provided the $35M loan, according to documents posted May 22 to the D.C. Recorder of Deeds.
"Interest rates are really low right now, so we're definitely refinancing properties where we can to take advantage of the market," Davis said.