Residential developer HAP Investments, known for eye-catching and sometimes pinkish designs by architect Karim Rashid, is launching an affordable-housing arm, in part to offset a potential downturn in the market.
The Manhattan-based firm announced Monday it hired Gary Gutterman, the former housing director at the Metropolitian Council on Jewish Poverty, to run its new division. Gutterman led the Met Council’s efforts to finance and develop affordable housing targeting seniors and tenants who need social services on-site. As HAP’s senior vice president for affordable housing, Gutterman’s task will be twofold.
“When this overheated market takes a turn, HAP wants to have projects going on that are somewhat resistant,” Gutterman said. “We also want to give back to the community.”
Building affordable housing is less risky than market-rate. Financing often comes from predictable city and state sources even in a down market, and there is a virtually limitless supply of potential tenants. So when the real estate market softens or tanks, constructing affordable housing can be a way for developers to maintain expenses at a lower rate of return, according to many in the business.
HAP has more than 10 projects in Manhattan and New Jersey. Two of them have already included affordable-housing components. And while Gutterman will help with similar projects going forward, especially because the de Blasio administration will be requiring more affordable housing in market-rate projects in exchange for subsidies, he plans to focus on building new, 100% affordable-housing buildings, and is already scouring the city for a suitable site.