Headwinds facing the affordable housing industry are not deterring national owner and developer Dominium.
“Making an affordable housing development work financially has not been this challenging in over a decade,” says Mark Moorhouse, managing partner and executive vice president of development. “Unfortunately, that’s happening at a time when affordable housing has never been needed more.”
In 2022, Dominium started 2,321 affordable housing units, landing it at No. 2 on the AHF 50 developers list. The company also ranked No. 3 on the AHF 50 owners list, with 37,610 units; No. 10 on the list of firms completing affordable housing acquisitions; and No. 2 on the list of firms completing substantial rehabs. Looking ahead, Dominium has roughly 5,000 units in the pipeline.
One of the biggest challenges for the industry has been rising costs. To reduce the overall cost of construction, the developer continues to work on streamlining to have a consistent unit design with common elements that can help drive down costs and reduce rework while still tailoring a building to meet the local needs and desires of a community.
Dominium adds that operating costs also have become a real issue to manage.
“They have always been tight, and the double whammy of the pandemic and inflationary pressures make this really important,” says chief operating officer Kyle Hansen. “Energy costs, insurance, and overall pressure on labor costs are really challenging and outweighing other factors, most of which also are rising.”
Another key goal for Dominium, which operates in approximately two dozen states, is organizing for growth.
It has regionalized its development function over the past several years, with its Minnesota headquarters solely focused on the corporate services structures. It now has offices in Atlanta, Dallas, and Phoenix and satellite offices in Denver, Florida's Tampa, and Washington, D.C.
“We are carefully looking at how we capitalize on that expanded reach to drive our growth, especially in areas of the country with the greatest need for affordable housing,” says Moorhouse.
This reflects the firm’s concentration in places of high growth and need, such as the Sun Belt states of Arizona, Florida, Georgia, and Texas.
An example of this work is Dominium’s recent partnership with April Housing, Blackstone’s affordable housing portfolio company, on two developments in Phoenix. Casa Azure will create 196 affordable housing units for seniors, while Aviara Flats will provide 372 units for families. Those 568 units will contribute to the city’s goal of 150,000 new housing units by 2030.
Dominium also recently broke ground on its fifth new-construction development in Texas—the 192-unit Matlock Flats in Arlington. Once completed, it will serve low- and moderate-income families.
In addition, the developer is partnering with PCs for People to offer free internet services to the residents.“The need for affordable housing has never been greater or in the public eye as much,” says Hansen. “It’s rewarding and good to be part of the solution, especially on the supply side.”
For Dominium, which has a head count just shy of 1,300, the culture and people make a difference.
“As a developer, contractor, architect, owner, and manager through the life cycle of a property, we are really dependent on a culture that believes in what we are doing and is engaged to make it successful—from the person tending the grounds to the community managers to the developers, accountants, etc.,” says Moorhouse. “This business also has little wiggle room between successful and challenged operations, and we find that culture is one of the things that helps us stay on the successful side.”
In addition, communication is critical, with the regular calls for all employees and senior management that started early in the pandemic continuing today to discuss what’s going on as well as the challenges and opportunities. Dominium also prioritizes the development of its people and finding ways to celebrate success and champion learning throughout the company.
