JBG Smith Properties announced Wednesday that it will launch an initiative to preserve or build between 2,000 and 3,000 “affordable workforce” housing units in the D.C. region over the next decade.
It’s a sign that the private sector is stepping up efforts to provide less expensive housing in a region that remains one of the priciest in the country. But the program also signals efforts by Chevy Chase-based JBG Smith (NYSE: JBGS) to alleviate concerns that housing prices could spike if Amazon.com Inc. (NASDAQ: AMZN) selects the D.C. region for its second headquarters, a potential $5 billion investment that could generate as many as 50,000 jobs over time.
JBG Smith’s holdings in Crystal City are widely believed to be a front-runner for Amazon’s HQ2. It is the largest locally focused real estate investment trust in Greater Washington, with massive holdings in Arlington, D.C., Reston and Bethesda, among other neighborhoods.
Company officials were not immediately available to comment about what the company considers to be affordable housing, or to provide details on the timing of when the units might come on line or where, or what amount of money it will invest in the program.
In a press release, JBG Smith said it is teaming with the Federal City Council on its “Washington Housing Initiative,” which the company calls a “transformational market-driven approach” to creating affordable housing. The initiative, per the release, will “bring together capital from private and philanthropic sources” to preserve or build affordable workforce housing. There is no mention of Amazon.
The independently managed Washington Housing Conservancy will acquire, develop, own and operate workforce housing in “high-impact locations,” according to JBG Smith, while a financial vehicle, called the Impact Pool, will provide mezzanine capital “to bridge the gap between traditional mortgage financing and charitable contributions.”
Local economist Steve Fuller said that JBG may be motivated to provide additional housing options for the potential Amazon workers. The new headquarters employees are expected to have average salaries of $100,000, but even those higher incomes aren’t always enough to afford housing in the District and its immediate suburbs, Fuller said.
“Somebody that has a household income of $100,000 or even $200,000 find that they are priced out of the market in Washington,” Fuller said. “Anybody that builds down — not at the top end but in the middle — is going to find a very strong market and a great demand for housing. There’s basically nothing available.”
Fuller said JBG Smith will also benefit from the publicity generated by the affordable housing initiative — and could actually be profitable doing it.
“The housing issue is quite critical to Amazon and to attracting other businesses to the Washington area, and I think those who think about how to do it can do this and actually make some money doing it,” Fuller said. “It doesn’t have to be subsidized.”
And if Amazon doesn’t choose the D.C. area for HQ2, the initiative will provide affordable housing for JBG Smith’s own workforce and those of surrounding businesses. “It is widely recognized that we are in short supply of housing,” Fuller said. “A lot of their workers can’t afford to live nearby so they have to commute long distances.”
JBG Smith, as it has for several quarters now, addressed the HQ2 competition in its latest earnings filing.
“We believe the Amazon process was partly responsible for the regional cooperation that produced dedicated funding of $500 million per year for Metro, as well as the renewed enthusiasm for other regional initiatives,” the company said. “We have also noticed heightened tenant interest in our holdings in Crystal City in the form of increased tenant activity. While we believe in the strength of our offering, the appeal of our highly educated work force and our city, the process is highly competitive.”
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Copyright Washington Business Journal, reprinted with permission