A growing need for more mid-market affordable housing, particularly in its targeted Sun Belt markets, has Elme Communities (NYSE: ELME), formerly WashREIT, anticipating its strongest growth in 20 years, says President and CEO Paul McDermott.
“That mid-market renter is really the deepest part of the demand curve, and we only see that curve growing,” McDermott told the REIT Report. While acknowledging the current volatile interest rate climate, he added that it doesn’t “erase the fact that there is a significant need for more affordable homes, especially in the markets that we're targeting, and in that particular rental band cohort that we're targeting also.”
Elme has been fully focused on multifamily since completing the sale of retail and office assets in 2021, although the REIT started messaging its intent to focus on multifamily back in 2016.
McDermott noted that households making between $35,000 and $75,000 comprise over a third of rental households in its targeted Sun Belt markets. However, the share of new product delivering into those markets since 2018 that's affordable to households making around $60,000 is 2% or less, he added.
The REIT has 20% of its portfolio in the Sun Belt, and McDermott said the aim is to increase that to around 40% in the near to midterm. “We think the breadth of the Sun Belt provides us with plenty of great and diverse opportunities for investment for the foreseeable future.”
Elsewhere in the interview, McDermott discussed how Elme’s new operating model and technology platform function on a daily basis and what benefits he anticipates that could produce. He also spoke of the ways in which Elme is working to raise the bar in terms of service for its tenants.