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On the heals of Google’s announcement that they are investing $1 billion in housing across the Bay Area, I thought it fitting that this month’s Transmission should be the article I wrote about employer-assisted housing.
Without further ado…
Requiring Employers to Assist Employees with Housing Would Unleash Innovation
BY DREW MEYERS
Originally Published: January 31st, 2019
And as much as real estate geeks would like to believe otherwise, technology can’t fix the problem.
Corporations are required to provide health care. Many provide 401k matching. Parental leave. Flextime. Temporary housing for relocations.
Why not offer the biggest perk of them all?
The Case for Employer-Assisted Housing
Employer-Assisted Housing (EAH) is not the moonshot thinking some might assume. It’s already happening at some level within various sectors of the employment market.
Plenty of nonprofits have invested in housing programs. The University of Washington offers affordable apartment complexes for faculty and staffand a home loan program for buyers while Columbia, UCLA, and Hawaiimaintain similar programs. Teacher Next Door is a national home buying program and West Virginia University offers free housing to some of its nurses.
Although corporate examples aren’t as prevalent, they do exist. In the UK, “Lidl has helped to build 335 homes.” Meanwhile, the Homes for Working Families previously published research and case studies about noteworthy EAH programs within AFLAC, Harley Davidson, CVS, and others.
According to Greater Philadelphia Urban Affairs Coalition, the main incentive for employers is clear: attracting and retaining quality employees in a competitive job market. Additional benefits include: enhancing quality of employee life by decreasing commute times and alleviating housing costs, revitalizing communities by “pump[ing] relatively ‘lazy’ capital on corporate balance sheets directly into the economy”, and improving civic engagement.
The incentive for employees is equally clear: driving down rent costs by leasing entire floors/buildings rather than units or becoming the landlord themselves by developing the supply using their own balance sheet. They would additionally, save on management fees, control rents, and play a role in the appreciation of their employees’ communities.
While some counter that employer-managed apartment communities in close proximity to the office lead to less diversity and reduced work-life balance, research actually shows that lower commuting times greatly impact work satisfaction for the positive—on the happiness spectrum, adding a mere 20 minutes to an employee’s daily commute is equivalent to a 19 percent pay cut.
At every level, EAH makes sense for those employees priced out of the local market, and for employers eager to recruit and retain the best talent possible. Look no further than movements within the tech industry to see the validity of EAH.
In 2017, Google put $800 million into properties (locked) to house 11,000 employees and ordered 300 modular units from Factory OS at a cost of $25 to $30 million. Facebook is currently working on a planned community that includes “1.75 million square feet of new office space, 1,500 housing units, and a 112,500-square-foot hotel.”
Their endeavors into home building “could transform what it means to live and work in Silicon Valley … and simultaneously alter the traditional relationship between employer and employee” for the thousands without the capital and manpower to make multi-million dollar investments with a 10 to 20 year outlook.
Ushering in a Sea of Change of Innovation
Some movement, however, is not enough to combat the housing crisis. What if, as is the case with health care, companies above a certain size were mandated to provide housing assistance? How would changing the conversation from “you should” to “you must” change the industry landscape?
Talent competition would drive employers innovation to differentiate on a broader spectrum of services. The real kicker is the distribution potential: imagine if corporations were incentivized to onboard customers.
What if Weyerhaeuser made every employee a cash buyer by using Ribbon or FlyHomes? What if every Starbucks barista were offered a Super maintenance subscription? What if every Proctor and Gamble manager was provided a Setter home manager? What if Walmart contributed $75 per month toward a down payment for any home purchased with the help of an eXp agent? What if UPS purchased renters insurance through Lemonade for all their drivers?
Sam Le Pard, adviser at Arc & Co, mentions “The greatest beneficiaries of corporate-sponsored accommodation will likely be professional serviced accommodation providers.” That means a boon for a sector I called out in my 2019 predictions: alternative lodging providers like Lyric, Stay Alfred, and Domicile.
A change is coming and housing assistance/perks offers the largest untapped upside for employers to differentiate in a global war for talent. Since housing is not a core competency of corporations, tech startups and brokerages alike should be thinking strategically about how to help them offer innovative services to their workforces.
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