How workforce housing development can partner with the healthcare industry

Healthcare facilities are struggling to find and retain staff members who live near their workplace in areas where housing costs are high. Partner Insights spoke to JPMorganChase’s Tucker Kaufmann, Industry Executive of Healthcare, Higher Education & Nonprofit Industries and Lionel Lynch, Head of Workforce Housing Solutions. They are both working on solving two problems at once, building more workforce housing and improving how healthcare organizations serve their communities. 

JPMorganChase’s Workforce Housing Solutions group is part of the firm’s Commercial Real Estate (CRE) line of business. The group has decades of industry leadership and expertise in the traditional affordable housing realm as well as market-rate housing. 

JPMorganChase is now actively deploying programs to finance multifamily communities with rental rates that fit middle income earners. By partnering with the firm’s healthcare group, they’re making workforce housing more affordable while also serving workers in the medical field. 

“Over the last 20-plus years, the healthcare banking team has specialized in working to understand the financial needs of healthcare services organizations and tailor optimized financial solutions for our clients,” said Kaufmann. “We’re bringing all the resources of the JPMorganChase organization to bear on challenging issues, including housing affordability.”  

The banking team prides themselves on helping clients discover how healthcare systems can create a brand in the communities they serve and raise the level of care for patients. This innovative financing program provides healthcare staff with an affordable place to live that’s close to where they work.

Lynch highlights a troubling statistic from the Joint Center for Housing Studies, noting that over half of U.S. households face a “housing cost burden,” with many spending a third or more of their income on housing expenses.

“In the healthcare system, there are more than 20 million directly employed workers,” said Lynch. “If you think about the size of the industry, then consider that many of them are carrying the burden of paying a large share of their wages for housing; it’s not a sustainable situation.”  

“For every one doctor there’s two to five people who are supporting the patient’s needs and often being paid at levels substantially less than a doctor. These individuals are really impacted by this cost burden,” adds Kaufmann while quoting statistics from the American Medical Association. 

Affordable workforce housing can help sustain healthcare operations by attracting and retaining their workers. JPMorganChase understands the different opportunities and motivations separating the real estate and healthcare sectors and then find ways to make them complementary. 

From a commercial real estate perspective, they can show healthcare systems how to use their land assets as a tool to reduce the cost of building, and lower rents for new housing built on their land. This approach differs from a traditional real estate return on equity perspective but can be a strategic way to stabilize their staff.  

The salary of an entry-level nurse in Scottsdale, Arizona is roughly $66,000 a year, depending on experience. The median rent in that market is about $3,300 a month.

“In doing the math, an employee has a cost burden to afford an apartment within the community they serve,” Kaufmann shares. “The substantial rent payment makes it difficult for a healthcare system to hire and retain entry-level workers.”    

“There are additional benefits of building workforce housing on or near healthcare campuses in terms of employee safety, commute times, and retention,” said Lynch. “In addition to attracting and retaining employees, cutting commute times, and making the commute safer, there’s also a boost in employee satisfaction.” 

“With less time spent commuting, they can focus more on their work and their own well-being. Think of a nurse who’s traveling two hours each way working in a high-pressure environment and spending half their income on housing,” he adds.  

Kaufmann notes that brand recognition within a community also plays a factor in locating workers near their jobs. “This is really a win-win for all parties involved,” he said. “In a lot of markets, housing is constrained by a shortage of land. Healthcare systems often own land and typically employ large numbers of people.” 

“In a lot of cases, they’re in a position to contribute land they already own to develop housing. Selling or leasing land to a developer to construct housing can make deals pencil out and help retain staff,” said Kaufmann. “It’s a different motivating factor that allows the cost of capital to come down, which can push a workforce housing development deal over the finish line.”   

“We have a client in the Northeast that partnered with a private developer to build 295 apartments that are primarily for their workforce,” said Lynch. “They were able to invest equity at a lower cost of capital, so the developer was able to still make their returns while offering lower rents. In some cases, the apartments can also be leased to non-staff tenants.” 

He adds, “Some of our clients start the process by contributing land they already own in the form of underutilized surface parking lots. It’s not like there needs to be green grass for the land to be usable.” 

Healthcare systems, especially the larger ones, are always looking for opportunities to purchase real estate for future expansion, even if they’re not adjacent to their nearest hospital. Now they can pair those parcels with workforce housing development.  

Interested developers can start by learning about the healthcare systems in their communities and recognizing they may be good partners. Especially if they have projects they’re actively working on that need the right financing partners. Using online maps to locate land that doesn’t have a building on it is another option. 

JPMorganChase has a dedicated group with the knowledge, ideas, and insights into healthcare and their real estate needs, and knows how to finance these kinds of projects.   

“Healthcare companies obviously don’t specialize in building apartments, but they can start exploring the possibilities by contacting local developers,” said Kaufmann. “At JPMorganChase we’re always happy to help make those connections.” 

If you’d like more information on JPMorganChase’s Workforce Housing Solutions, please email the dedicated team at workforcehousing@jpmchase.com.