Higher education’s opportunities for workforce housing

Colleges and universities often have assets they may not realize are essential for workforce housing development: 

• Land: Many institutions have surplus real estate on or around campus that isn’t intended for academic use and can be sold or leased long-term to developers for housing.
• Capital: Institutions with strong financial positions can often access capital at lower interest rates than typical real estate developers or operators. Additionally, institutional endowments can catalyze workforce housing development by investing at their traditional return expectations, which are typically lower than real estate funds’ expectations. With both approaches, cost savings can be passed on to residents through lower rents. 
• Renters: Colleges and universities have a ready pool of employee and graduate student families seeking affordable housing close to campus, providing reliable occupancy. 

Higher education institutions can also gain several strategic advantages by creating workforce housing programs: 

• Recruiting advantage: Convenient, affordable housing near campus powerfully attracts and retains talent by reducing commutes and housing cost burdens. These factors boost employee satisfaction and strengthen their connection to the institution. Faculty and staff are more likely to attend activities the institution has to offer, like enjoying a game or concert. “These institutions care about brand identity and building community. If your adjunct faculty has to live 40 miles away, there can be a disconnect from campus life,” Kaufmann said. 
• Stronger town-gown relations: Higher education institutions can leverage their land and resources to increase the housing supply for local residents, not just their own employees. This can strengthen ties between institutions and their communities—particularly in areas with workforce housing shortages. 
• Cash flow: Workforce housing tends to generate durable renter demand and cash flow. “Steady occupancy can help provide consistent, predictable returns. Institutions may have the opportunity to use that income to fund operations and monetize their assets,” said Lionel Lynch, Head of Workforce Housing Solutions at JPMorganChase.   

Higher ed workforce housing program models

Colleges and universities are using a variety of models to develop workforce housing—often combining multiple approaches to maximize impact and address specific campus needs. 

Building new workforce housing

Developing new housing requires time investment, but colleges and universities can design approaches that align with their available assets, strategic objectives and time horizons. 

For instance, higher education institutions with capital but limited land might consider the joint-venture model used by a New England university, which worked with a private developer to build apartments for faculty, staff and graduate students on privately-owned property near campus.  

Alternatively, a university in Colorado leveraged its own land assets by contributing property to a developer-led project, securing a portion of units at affordable rents for university employees. 

Apartment development presents different challenges than academic buildings or residence halls, making collaboration with experienced multifamily developers valuable. Some higher education institutions have successfully led housing development initiatives directly, including a California university that formed a nonprofit to create a mix of for-sale and rental housing for employees on university land.  

Buying existing housing

Purchasing existing multifamily housing can offer a faster implementation path when suitable properties are available near campus. One California university-affiliated nonprofit purchased 120 newly developed units to expand faculty and staff housing options while complementing its own development efforts. 

“There are a variety of possible approaches, and it isn’t either/or,” Lynch said. “It depends on the site, the scale, and the overall university context.”     

Getting started

JPMorganChase has dedicated teams that provide financing for workforce housing and specialize in serving higher education institutions. Those teams collaborate to help colleges, universities and real estate developers and investors explore workforce housing opportunities. 

“There’s power in bringing our teams together to provide insights and figure out the most efficient and effective way to make projects happen,” Lynch said. 

Successful collaboration between higher education institutions and real estate developers and investors begins by recognizing complementary strengths and mutual benefits. 

Lynch recommends colleges and universities explore resources from the Council of Academic and Workforce Housing to learn more about how other institutions have approached workforce housing programs. Another good starting point: determining who should be involved in workforce housing-related decisions. The team may include people outside traditional real estate roles, such as representatives from human resources. 

“Once you get the right people in the room, it can be so impactful,” Lynch said.