Affordable Housing Coming to Disney World

Walt Disney World has announced that it’s earmarking nearly 80 acres of land for a new affordable housing development in Central Florida. This post will share details about the plan, plus our commentary about Orlando’s housing crisis, skyrocketing shelter inflation, and (some of) what’s causing this. (Updated November 16, 2022.)

“We are invested in working together with our community to solve complex issues,” said Jeff Vahle, president of Walt Disney World Resort. “The lack of affordable housing is affecting many people across our country, including right here in Central Florida. With this initiative, we’re lending a hand to make a real and meaningful impact in our community by tapping into the best of our company’s strengths. This is the right opportunity and the right time to take action.”

The development, which is expected to include more than 1,300 units, will be constructed by a third-party affordable housing developer and will be located on Walt Disney World’s land in southwest Orange County, Florida. It will offer Central Florida residents a variety of home choices that are affordable and attainable, in a great part of Horizon West near the new and expanding Flamingo Crossings Town Center retail and dining complex. The development will be available for qualifying applicants in the region, including Disney Cast Members.

November 16, 2022 Update: Walt Disney World has offered its first update on this housing development project since announcing it back in the spring. We now know the specific location for this initiative, which is in a great spot west of State Road 429, just a few miles away from Magic Kingdom, near schools and shopping, including Flamingo Crossings Town Center. (We know it’s a great spot because we lived a stone’s throw from here up until this year!)

The Michaels Organization will build, own and operate the property. According to Walt Disney World, this is a prominent and visionary developer known for creating high-quality homes in communities in many states, including Florida. (I’ve seen a lot of housing developers in Central Florida, but never this one. Perhaps I’ve just missed it?) The development is expected to be privately financed and limited to applicants within a certain income range.

“For more than 50 years, Walt Disney World has cared for and invested in our community, and we’re committed to being a part of this solution which will bring more attainable housing to Central Florida,” said Jeff Vahle, president of Walt Disney World Resort. “We will continue to find ways to use our resources to make a difference in the community we call home, and we’re excited to take this step with a nationally recognized developer.”

After a thorough search, Disney stated that it chose The Michaels Organization due to its long-standing track record in building and managing attainable housing communities. Negotiations between Walt Disney World and The Michaels Organization on a definitive agreement for the initiative are presently underway. The development will be open for qualifying applicants, including but not limited to Cast Members.

“We are excited to work with an iconic brand like Disney to deliver attainable housing for the Central Florida community,” said Michaels CEO John J. O’Donnell. “Our goal is to create a repeatable model that we hope will inspire other companies and municipalities to create high quality, attainable housing in their own communities.”

This initiative will help offer a viable solution to one of the nation’s greatest challenges and will support and build upon Orange County’s Housing for All action plan to address housing affordability for local residents, an action plan brought about by the passion and leadership of Mayor Jerry Demings.

Here’s a video Disney previously released along with the original announcement:

According to Walt Disney World, this initiative has been in the works for a while as the company has been focused on finding solutions to this challenge for quite some time.

Attainable housing is one of many ways Disney engages with local leaders to help the community find lasting solutions to this issue, from donations, to supplies to its Disney VoluntEARS program and more. Earlier this year, Walt Disney World and Disneyland donated $300K to local food banks to support people in the community facing food insecurity. That donation was part of the $5.5 million that Walt Disney World has contributed to important community causes during the 50th Anniversary celebration, including organizations addressing the need for affordable housing.

It’s also not the first time the Walt Disney Company has assisted local communities with underserved housing needs. Several years ago, Disneyland Resort led an effort to revitalize the Orange County Housing Trust that provides “last mile” funding for affordable housing projects in Anaheim.

This made the Buena Esperanza project — a converted studio apartment community for veterans and homeless individuals with mental illness — a reality. In addition to providing them a place to live, the community offers job placement and mental health and wellness support to residents.

As a result of Disney’s investment a second project, Finamore Place, in Anaheim is under construction with an expected completion date of early summer 2022. It will provide over 100 additional housing units. Disneyland Resort will continue to show support for these and other such worthy endeavors.

The Walt Disney Company also spent years investing in local nonprofits on the front lines of important causes in the community like affordable housing. Through hundreds of millions of dollars in donations, the Disney VoluntEARS program, contributions to local food banks and more. Just a few months ago, Walt Disney World donated $3 million to some of these very same organizations.

In terms of commentary, this doesn’t come as a huge surprise to us. Shelter inflation is skyrocketing, with rising rents outpacing even the red-hot housing market. You’ve undoubtedly seen or read the headlines, but in case not, here’s an article from earlier this year about astronomical rental rates. That’s from this January, and it’s only gotten worse since.

In Central Florida, this story has dominated the news, with numerous analysts showing the local market far outpacing the national average. Rent.com’s latest data shows Orlando’s average apartment increased 38% year-over-year, far above the 20% national rate and 5% typical year increase. Again, that’s as of January–and is also only one year. Since this time in 2020, rents are up even more significantly.

As this blog is wont to do, we’ve gone off-topic several times in the last few years and commented on the impact of people “fleeing to Florida” on Walt Disney World. This trend has also garnered a lot of national attention recently, but the phenomenon is actually nothing new.

Back when Annual Pass prices increased in February 2020 and the June before that (in other words, pre-pandemic), we mentioned the ongoing population explosion in Central Florida. At that time, several cities in the Orlando metro area were among the fastest growing in the United States. Many of these new Florida residents are (and were) people leaving the Northeast and Midwest.

Our commentary at the time was this: “If new home prices and construction around Walt Disney World are any indication, these transplants are also on the more affluent end of the spectrum. (Behind Magic Kingdom, there’s been a proliferation of subdivisions with no end in sight—most of these have homes starting at over $300,000 and ranging up to $800,000.)”

Those price points now seem quaint (add another couple hundred thousand dollars on), but the sentiment still rings true. And this was long before “Zoom Towns” had entered our collective vernacular. If you’ve seen any of those ‘fleeing to Florida’ stories in the news, you’re undoubtedly aware that this trend has only accelerated in the last two years. In fact, many of you might be fresh Florida transplants from the Midwest or Northeast. In neighborhoods around Horizon West, you’ll spot more Cowboys, Yankees, and Patriots pride than for any Florida franchise (yes, even the Buccaneers!).

This has disrupted the local market in a several ways. First is the obvious one–there’s a sudden surge of people and building cannot keep pace with the influx. (To the credit of D.R. Horton, Toll Brothers, etc., they are trying their darnedest!)

Second, many of these people work remotely and are not part of the local labor market. I don’t have any data to corroborate this, but my strong suspicion is that the median income of these Florida transplants who work remotely for out-of-state companies is significantly higher than the average local hospitality industry worker.

In other words, there is not enough housing supply and suddenly there’s a sharp increase in median wages–but not necessarily among those who actually, physically work in Central Florida. Even with their own wage increases, the frontline workers at Walt Disney World, Universal, SeaWorld, and wherever else simply compete with white collar professionals who work-from-home.

This also probably parallels a story you’ve seen on national news. Here’s a piece on the “Great Reshuffling” from CBS Sunday Morning last May that focuses on how the Boise housing market had been upended, largely by relocating Californians who saw that Idaho market as inexpensive relative to what they had been paying. (It has only gotten worse since then.) Same idea in Central Florida, but with Northeasterners instead of Californians.

From my perspective, Walt Disney World’s motivations are fairly obvious. This housing is needed for its own Cast Members, who will be the primary “beneficiaries” of the development. (I’d assume company employees will be given priority, and it ends up mostly just a development for displaced Cast Members.)

Moreover, if Central Florida’s unhealthy housing market continues on its current course, the company will have (even more) trouble hiring Cast Members. I’m not going to revisit the labor shortage here, but it’s certainly relevant and the motivating factor behind this move. Disney is certainly a charitable company, but this is more about fulfilling Walt Disney World’s own needs.

Universal is facing a similar issue, and that’ll only be exacerbated once Epic Universe prepares to start staffing frontline roles. (I’m actually curious how they’re going to accomplish the hiring needed for that many guest-facing roles in an entirely new theme park. Here’s hoping they have a plan.) Suffice to say, it should be no surprise that the major players in the Central Florida theme park and hospitality industries are foraying into housing and trying to address this issue.

This is not to cast aspersions or criticize Walt Disney World. The company could simply turn a blind eye to this and lean even more heavily on the College Program, not wanting to associate itself or its employees with affordable housing.

While I think there are more underlying issues that need to be addressed, this is still an admirable move, and one that is not without risk for Walt Disney World. The media loves to connect Disney to any unpleasant headline to attract eyeballs, and exactly that could happen here if/when there are problems with this affordable housing development down the road. (It doesn’t take much an active imagination to envision future headlines with the words “Disney” and “slumlord,” regardless of reality.)

My only commentary beyond that is: build, baby, build. 

This is a good first step, but a ton more construction and reduction of red tape is necessary. While way late to the party, hopefully the Federal Reserve increasing interest rates will cut into investor activity and reverse the current, unsustainable trend of shelter cost increases. That, in turn, should reduce prices–or at least slow price growth. (My fear is that some of the aforementioned home builders will instead slow the pace of construction given the added market uncertainty. Or that higher interest rates will make new home purchases even more unattainable.)

In addition to that, there need to be changes to zoning, a relaxation of excessive land use restrictions, and greater incentives for building or redeveloping commercial real estate that’s now unneeded thanks to WFH–and perhaps disincentives for investment and speculation. Of course, all of that is well beyond the scope of this post (and I should add the caveat here that this commentary is a reductionist look at the causes and consequences of rising rental prices). For now, Walt Disney World deserves kudos (as does Universal, which is doing something similar) for the initiative. It alone won’t resolve the supply/demand imbalance in the Central Florida shelter markets, but it’s a solid start.

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YOUR THOUGHTS

What do you think of Walt Disney World’s announcement that it’ll earmark ~80 acres of our land for a new affordable housing development in Central Florida? Is this a good move or bad move? A solid start, or still not nearly enough? Do you agree or disagree with our commentary? Any questions we can help you answer? Hearing your feedback–even when you disagree with us–is both interesting to us and helpful to other readers, so please share your thoughts below in the comments!