Commercial/Multifamily News Briefs September 29, 2022

Report: Moderate-Income Rental Housing a Viable ESG Investment

A new report refutes the misconception that rental apartments priced for the middle-income workforce such as teachers, nurses and first responders have a lower return on investment than apartments with higher rent levels, paving the way for moderate-income rental housing to be a competitive ESG investment.

The report, sponsored by Affordable Central Texas and the Wells Fargo Foundation, defines a new asset class, Moderate-Income Rental Housing, or large multifamily rental properties occupied by tenants earning between 60 percent and 120 percent of the Median Family Income with at least half the residents earning less than 80% of MFI.

Analyzing data since 2011, the report demonstrates MIRH assets outperformed rental properties with higher rents, averaged an unleveraged return of 9.4 percent, and had the lowest risk, 2.6 percent spread when compared to other real estate asset classes.

“Demand for affordable rental housing for moderate-income households is surging as homeownership becomes unobtainable for many. At the same time, interest in Environmental, Social and Governance investments is growing rapidly,” said David Steinwedell, President and CEO of Affordable Central Texas. “We can’t afford to lose the people who power our communities, and we have a market solution to a market problem. MIRH delivers consistent, predictable returns and makes a real difference in the lives of our neighbors.”

The report drew on data from the National Council of Real Estate Investment Fiduciaries Property Index and analyzed eight metropolitan areas—Atlanta, Austin, Dallas, Denver, Houston, Phoenix, Seattle, and Washington, D.C., from Q2 2011 to Q2 2021. The nation’s three largest metros, New York, Los Angeles, and Chicago, lacked enough MIRH assets to allow for analysis due to their well documented affordability challenges.

The research was prepared by Mark G. Roberts, Director of Research at the Folsom Institute for Real Estate at Southern Methodist University Cox School of Business, and Jake Wegmann, Associate Professor at the Community & Regional Planning Program at the University of Texas at Austin School of Architecture.

The full report and further information about MIRH’s performance as a new asset class can be found here.

Marcus & Millichap, Project Destined Announce Expanded Partnership

Marcus & Millichap, Calabasas, Calif., expanded its relationship with Project Destined, a social impact platform that provides training in financial literacy, entrepreneurship and real estate.

Project Destined was founded by former Carlyle Group executive Cedric Bobo and has partnered with leading real estate firms and universities around the country to provide students from all backgrounds with paid, virtual internship opportunities where they can explore the real estate industry and ownership through live real estate deals in various cities across the United States.

Beginning in spring 2021, Marcus & Millichap partnered with Project Destined in the San Francisco Bay Area, Chicago, Los Angeles and Dallas, to provide participants with mentors of various levels including, executives, regional managers and investment sales professionals who taught intern scholars the nuances of commercial real estate. Interns benefited from an eight-week Investment Sales Bootcamp featuring an executive speaker series, specialized workshops, and scholarship opportunities. The partnership expands with the launch of Project Destined in Vancouver, Wash. in fall 2022, opening opportunity to more participants. Visit Project Destined for more information.

Marcus & Millichap also provides development for interested, driven individuals via the William A. Millichap Fellowship, a 24-month training and development program that progressively builds on critical research, financial analysis, marketing, and relationship-building skills. For more information, visit The William A. Millichap Fellowship. In addition, the firm offers full-time in-office Summer Internships with hands-on experience, mentorship and industry-leading curriculum. The competitive selection process occurs on a rolling basis.