01 Dec Multifamily Executive: Is Single-Family Build-to-Rent a True Missing Middle Solution?
The missing middle—defined here as households who earn between 80% and 120% of the area median income—occupies a difficult position in the housing market. In many areas, households at this level do not qualify for subsidized housing, cannot afford the housing options in a given market, and have very little in the way of smaller-scale housing options from which to choose.
As the model currently exists, its growth is driven by financial gain. If single-family build-to-rent were to suddenly become unprofitable, it would no longer be built and its operating structures may change. It is also still subject to the same constraints on land, labor, material prices, and regulatory cost.
“[In urban areas] land is valued at a certain price based on how it has been defined from a zoning perspective,” says Ken Colao, founding principal and president of CNY Group, a New York–based development services firm. “For example, a property zoned where an 80-story structure can be constructed is going to be worth more than a site with a height cap that is restrictive. … Consequently, the land itself becomes too expensive to be developed into missing middle housing without an overarching shift in planning and zoning practices.”