- May 1, 2015: Vol. 27, Number 5

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Workforce housing: A value-add multifamily strategy can deliver durable cash flow

by Noah E. Hochman and Mark Enfield

The multifamily sector led the recovery in commercial real estate over the past several years, as occupancy remained buoyant and U.S. housing markets began a secular shift toward renting that is still under way. The strong performance spurred the formation of numerous funds targeting the sector but, with capital flowing in and returns easing, some investors are beginning to question whether they have missed the opportunity.

The asset class continues to offer significant long-term potential, however, and an innovative value-add strategy can deliver an institutional-scale platform for investing in one of the most compelling segments of the multifamily market: workforce housing. It is a strategy that captures the durable returns of the asset class while providing a good measure of downside protection against potential interest-rate increases.

Multifamily housing was the first property type to recover from the global financial crisis, as financial stress forced many people

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