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In annual filings with the Securities and Exchange Commission (SEC), many of the largest corporate landlords identify regulation as a factor that could impact the value of their real estate investments. Just-cause eviction laws, rent control, and other mechanisms designed to protect tenants ostensibly pose a threat to investors seeking to maximize returns from their investments in workforce housing. Despite this, the sector has become increasingly attractive to corporate landlords and their institutional partners: public pension funds, life insurance companies, and health insurers.
Workforce housing, which is distinct from discretionary housing geared to renters of choice or affordable housing supported by public subsidies, is the primary form of shelter for tenants in lower-income jobs. Tenants in workforce housing are considered renters by necessity. For their part, gray-collar workers like teachers and first responders fall into the low mid-range housing category, which is separate from workforce housing. While also understood to be renters by necessity, these households often have access to quality-of-life improvements that workforce housing tenants do not.
Rising rents have been particularly pronounced in the workforce housing segment, squeezing tenants across the country. According to a new report released today by the Private Equity Stakeholder Project (PESP), most regions nationwide experienced workforce housing rent increases of 20 percent or more from 2021 to 2025. Of the 94 rental markets PESP analyzed, only five markets saw workforce housing rent increases below 10 percent.
Tenants in workforce housing have faced high rates of eviction for decades, but as the affordability crisis takes hold and sophisticated investors encroach further into the sector, “it is likely that already-high eviction filing rates could worsen,” the report explains.
“It is so fundamentally screwed up and wrong that these millions of units of housing are the base of our economy, and that there’s basically no protections for the people who live in them,” Madeline Bankson, senior research and campaign coordinator for housing at PESP and author of the report, told the Prospect in an interview. “It doesn’t have to be that way.”
FANNIE MAE AND FREDDIE MAC, which package and securitize loans for investors in the housing market, administer programs to enhance affordability in workforce housing. As the report points out, these two government-sponsored enterprises (GSEs) have refrained from instituting tenant protection requirements in their loan terms, allowing corporate landlords to secure low-interest loans and boost profits with no strings attached. Private equity executives have openly touted the discounts and “preferential treatment” provided by the GSEs; one such executive previously told WealthManagement.com their strategy seeks to “simply acquire and maintain those assets in a sound condition.”
It would be charitable to say that improving tenant outcomes was an afterthought, as it appears to have not been a thought at all.
Meanwhile, President Trump wants to privatize the GSEs, which have been under conservatorship since 2008. “Their mandate is to open up more affordable housing for people in the United States by creating liquidity in the market,” Bankson told the Prospect. “Privatization just allows for this untethered lending to continue while further destabilizing the housing market.”
Rather than focus on expanding housing access, William Pulte, director of the Federal Housing Finance Agency, has directed Fannie and Freddie to incorporate crypto into the mortgage underwriting process, when he isn’t engaged in spurious investigations of mortgage fraud.
THE PROSPECT OF LUCRATIVE RETURNS from workforce housing is not lost on institutional investors. For their part, public pension funds have maintained a strong appetite for these assets, with their steady income streams, easy loan financing, and favorable tailwinds—the most salient of which seems to be the massive demand for housing across the country.
Public pension funds, many of which are over-allocated to illiquid asset classes like private equity, view the workforce housing sector as a safe harbor for investments that can increase cash flows quickly. According to the report, further investment in the space “is likely to target areas with high job growth and in-migration, particularly in the Sunbelt region.”
To their credit, some investors have implemented workforce housing investment standards to rein in corporate landlords—predominantly private equity firms—and avoid contributing to negative tenant outcomes. Last year, the New York City Employees’ Retirement System (NYCERS), which manages over $94 billion, became the first public pension fund to adopt national property management standards for private real estate investments. Asset managers investing on NYCERS’ behalf must comply with a whole host of guidelines designed to protect tenants.
“It’s great that they kind of got the ball rolling with this, especially since other pension funds are looking to see what these larger ones are doing,” Bankson told the Prospect.
The caveat? None of the guidelines are legally binding. The good news is that they “can be easily strengthened,” the report argues. PESP recommends that public pension funds continue to adopt investment standards, and build upon them by adding limitations for rent increases, dissuading asset managers from acquiring properties marketed to low-income tenants, preventing corporate landlords from inflating rents they already own past 3 percent annually, and providing immediate relief to tenants in workforce housing whose rents have been artificially inflated.
The key word there is public. PESP has long supported efforts by retirees and community members to hold public pension funds accountable for the impact of their investments.
“Anyone can make a public comment,” Bankson told the Prospect. “Most of them are pretty image-conscious and do wish to answer to the needs of their constituencies.”
The first step, however, is understanding how retirement systems work. Much of PESP’s outreach has centered on popular education to demystify the complexities of institutional investment. During our interview, Bankson reflected on the time they attended a regular meeting of the North Carolina Treasury and witnessed the power of stakeholder engagement firsthand.
“I was with some tenants, and one of the tenants had her baby; she was a younger Black woman [addressing] all of these stuffy white guys in suits,” they said. “What ended up happening was the baby was this point of engagement, and they were forced to really see this woman instead of just writing her off … showing that you even can call for an alternative is the starting place, and I think that’s really powerful.”