High Miami Rents Spur Army To Tap Lendlease To Build First New Private Housing In 13 Years

Lendlease has signed a deal to build the first new privatized housing project for the U.S. Army in more than a decade. 

The U.S. arm of the Australian real estate group is planning to break ground later this year on nearly 75 houses and 60 two-bedroom apartments near the Army's U.S. Southern Command in Doral, Florida.

The development will be part of a new portfolio of military housing launched by Lendlease called Cadence Communities and will add to Lendlease’s total holdings of more than 40,000 military housing units. 

The development in Doral, the first new private housing development for the Army since 2010, will be built on 51 acres that were recently transferred to the Army from the Federal Aviation Administration. The site is directly adjacent to U.S. Southern Command, which hosts 1,200 military and civilian personnel responsible for overseeing operations in Central and South America and the Caribbean. 

The project is meant to address a housing shortage near the base, Rachel Jacobson, assistant secretary of the Army for installations, energy and environment, said in a statement.

“Since 2010 when SOUTHCOM’s current headquarters opened, service members stationed at U.S. Army Garrison-Miami have struggled to find adequate, affordable housing that was close to their duty station,” she said. “This new project will provide desperately needed quality housing for those stationed in Miami.”

The lack of housing options has been exacerbated by rapidly rising rents and high demand for single-family homes in Miami-Dade County, Phillip Carpenter, chief operating officer at Lendlease Communities, told Bisnow.

The average rent for a two-bedroom apartment in Miami was $3,550 per month in October, according to Zumper, up 18.5% from 2021. The military provides service members a basic housing allowance that fluctuates based on rank and location, but a private first class in Doral with no dependents would receive around $2,595 per month, according to Military.com. 

“They've been having difficulty in getting folks to agree to move to Miami to work there because of not only the high cost of housing, but also because they would get into a middle of a lease and then six months later the house would sell out from under them where they would have to leave,” Carpenter said in an interview Tuesday. 

The total Cadence Communities portfolio will include 535 homes across seven U.S. military installations in Florida, Pennsylvania, Illinois, Massachusetts, California, Wisconsin and Puerto Rico.

Nearly all of the homes are already built, but Lendlease will also take on the management of 17 new homes the military is building at Fort Buchanan in Puerto Rico along with 29 existing homes on the base. 

The U.S. military began privatizing housing in 1996 as part of the congressionally authorized Military Housing Privatization Initiative. Today, more than 99% of housing at domestic military installations is owned and operated by private companies, totaling around 203,300 housing units, according to the U.S. Government Accountability Office. 

Through the program, the Department of Defense enters into 50-year ground leases with 25-year options and transfers the ownership and management of the housing units to private companies.

“The assets that are conveyed to us allow us to go out to the private market and obtain the financing necessary to do the development work, and then to manage the program long term, for redevelopment in the out years, but also to manage the day-to-day leasing and facilities management of the homes,” Carpenter said. 

The MHPI program has faced questions surrounding the quality of housing stock in recent years. Several class-action lawsuits have been filed against private owners alleging they have allowed safety hazards and substandard conditions to persist on bases for years. 

The military created a tenant bill of rights and universal lease in 2020 for service members living in housing on bases as part of the annual National Defense Authorization Act, and Congress took up the issue in 2021, holding hearings in the House Armed Services Committee. In July, the Government Accountability Office recommended in a report that a standardized reporting and inspections process be created in response to delays at some projects. 

Lendlease was quick to adopt the new standards as they were created, said Gretchen Turpen, senior vice president and general manager for Lendlease Communities. 

“We have a state-of-the-art quality control inspection standard that includes oversight from a third-party, independent construction consultant to monitor construction,” Turpen said. “As the GAO report also noted, we provide detailed development [reports], construction reports, inspection reports and financial reports to the army on a monthly basis for their review.”

Lendlease and other private developers operating on military bases are ultimately competing with the private sector to house service members, which Carpenter said further incentivizes them to build housing that meets both the government’s standards and can measure up to what is available outside the gates of a military installation.

MHPI was designed to provide housing for 30% of the personnel on military bases, with the other 70% living outside of the program.

“They can take their housing allowance and go somewhere else,” Carpenter said. “We're in competition with that, and so we want to make sure we're got the product that people want to have.”