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  • Writer's pictureRealFacts Editorial Team

Developers Tap Municipalities in Attempt To Address Housing’s ‘Missing Middle’

aerial view of a neighborhood cul de sac.

To combat the housing crisis facing middle-income earners, developers are increasingly collaborating with local governments to create affordable housing options. The emergence of public-private partnerships is reshaping the multifamily housing landscape, aiming to cater to a demographic often overlooked by traditional housing solutions.

One notable example is The Markson in Austin, Texas, a 330-unit apartment complex developed through a partnership between NRP Group and the Housing Authority of the City of Austin. Situated near the Barton Springs recreational area, The Markson offers a range of one- to three-bedroom apartments with rents ranging from $1,487 to $3,182 per month. More than half of these units are reserved for tenants earning 80% of the area’s median income, with special incentives offered to first responders and teachers, including a free month's rent.

The Markson exemplifies a growing trend across the United States where developers, prompted by rising housing costs, are seeking solutions for the so-called "missing middle" – individuals who earn too much for traditional affordable housing yet struggle to afford market-rate rents. John Drachman, co-founder of Waterford Property Co., highlighted the dilemma faced by many middle-income earners, stating, "A lot of times the people I see who are moving out are in that middle-income category ... who are the teachers, firefighters, clerical workers ... people who go it's just too expensive to live [here]."

This shift in focus is evident in the increasing number of public-private partnerships aimed at creating workforce housing. While long-established programs like the Low-Income Housing Tax Credit primarily target lower-income earners, there have been few incentives for developers to address the needs of middle-income renters. However, as municipalities face pressure from constituents, creative solutions are being sought.

These developments not only benefit renters but also provide advantages for developers and government officials. For developers, incentives like tax abatements and favorable loan terms can significantly improve property performance, while renters enjoy reduced rents, enabling them to save for other expenses. Moreover, elected officials are responding to constituents' concerns about high rents, making public-private partnerships an attractive solution for all parties involved.

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