Housing Funds Target Priced-Out Residents

Missing Middle Moves to Forefront

An increasing number of funds are focusing on housing located near workforce centers that is affordable for moderate- to middle-income households.

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JBG Smith, developer of premier mixed-use properties in metropolitan Washington, D.C., launched its Impact Pool in 2018, completed the vehicle’s first closing in 2019 with $78 million in commitments and made its first investment in January 2020—$15.1 million of mezzanine financing to support the Alexandria Housing Development Corp.’s $106 million acquisition of the newly renamed Parkstone Alexandria, a 326-unit, recently renovated apartment tower in Alexandria, Va.

Most of the 326 units at Parkstone Alexandria in Alexandria, Va., are affordable for middle-income renters. Image courtesy of JBG Smith

“We believe that there has not been enough focus on what we call ‘the missing middle,’ residents who make too much money to qualify for traditional housing assistance, but do not make enough to afford other essential needs on top of rent,” said AJ Jackson, executive vice president of Social Impact Investments at JBG Smith, said.

Los Angeles-based Canyon Partners Real Estate LLC’s Canyon Multifamily Impact Fund IV was introduced last year with financing partner Santander Bank to purchase and manage $100 million of workforce housing apartment communities across the Northeast.

Private capital and local developers and owners, however, remain the most acquisitive in the market. “There’s certainly not a stigma. In fact, workforce housing is very attractive to a lot of institutional capital, including global capital, but it’s hard for them because they need to put out larger amounts of capital typically,” said Jeanette Rice, head of multifamily research with CBRE.

Acquiring workforce housing usually boils down to a value-add proposition, but investors are also buying properties and addressing some capital expenditure issues without engaging in major renovation programs. “They’re just maintaining the property and buying it for the long-term income stream, and I see more of that today,” Rice explained.


Sector Insights rotates among market rate/luxury housing, workforce housing, low-income housing, student housing, senior housing and mixed-use.

Read the April 2020 issue of MHN.