And while an even larger percentage (40 percent) of 2008 Strategies Survey takers plan to target the Gen Y market, many expect that the fruition of the echo boom is still a couple of years away. “I continue to hear that Gen Y is coming, but it ain’t here yet,” Cavenaugh says. “Here in Chicago, we have some younger people looking, but they are very rent-sensitive. They are definitely not checking out the two bedrooms. But when Gen Y hits, it will be a stabilizing growth force for the marketplace.” Until then, the industry seems content to focus on Gen Y’s parents and grandparents. “The 55 and better demographic is holding its own,” says Michael Mendillo, president of West Long Branch, N.J.-based Wentworth Property Management Corp., a fee-based manager that claims 250,000 units of property under management across the condo, homeowners association, apartment, and mixed-use markets. “All of our boomer and active adult-type communities are literally off the charts in the Carolinas, in Atlanta. We see significant growth opportunities there.”
GRABBING SHARE Despite such optimism for both short-and long-term industry prospects, most multifamily principals are still uncertain about how M&A activity in 2008 might affect their firms. A full 38 percent of respondents to the 2008 Strategies Survey were unsure what types of acquisitive activity they would be engaging in this year, while another 19 percent said they would likely make no moves at all. “I am solely focused on our [existing] portfolio and our business,” says Dan Hunt of Hunt Associates. Not everyone is standing pat, though. As the year begins, Alterra will be moving into four properties in Houston comprising 1,348 units. The 80/20 acquisition deal lands the firm in Texas, where Papunen plans further growth of the company’s market share and geographic footprint. On the property management side, Greystar has been hosting several “preliminary discussions” with developers looking to outsource day-to-day operations. “The larger fee managers like us and Riverstone and Pinnacle and Lincoln certainly have our ears open to those overtures,” Greystar’s Stacy Hunt says. “You have to keep your eye on the quality ball, though. I don’t think anyone wants to become the Wal-Mart of fee management.” Indeed—whether they are making an M&A play or not—multifamily powerhouse players unanimously say that 2008 is the year to concentrate on the here and now and maximize business opportunities while the going is good. “We are positive about the apartment business,” Cavenaugh says. “We have ramped up, we’ve put a great team together, and we hope to really make a dent [to] take our piece of the share.” Mendillo agrees: “It is the most exciting time to be in this business. We are extremely excited about what we have, what we are working with, and what we are putting our dollars into.”
To see how your peers plan to raise the bar in the areas of technology, amenities, green building, marketing, and finance, click on the links below.
Technology
Back to the Future
Amenities
The Hit List
Green Building
Join the Party
Marketing
Cyber Savvy
Finance
Hard Cash
Talking Back
Dan Hunt, president, Hunt Associates
Q: What market conditions will affect your strategies for doing business in 2008?
A: “We are still experiencing an oversupply of condominiums, despite the fact that prices have dropped significantly. The No. 1 thing we are doing is keeping our eye on this huge oversupply, and for that matter, the inventory of unsold single-family homes and single-family lots.”
Rick Cavenaugh, president, Fifield Cos.
Q: How will the cost of labor and construction affect development financing next year?
A: “Until we see change in the cost structure, I don’t think you can justify building B-type properties. It is still costing A-type dollars, but you are only getting B-type rents. Unless you are doing tax credit, bond, or some [other] type of assisted deals, I don’t know how you service the market at the cost structure that is out there today on wood frame construction.”
Lynn Klug, vice president of marketing and training, Sares-Regis Group
Q: What online marketing site ranks high on your list?
A: “Craigslist is the most beautiful site of all. We get so many rentals from that site, and it’s completely free. But you have to remember to refresh it everyday [so your listing stays on top].”
About the Survey: The MFE 2008 Strategies Survey was conducted in October by Indianapolis-based research firm Specpan on behalf of the magazine. In total, the survey collected 116 unique responses, of which 68 qualified as multifamily professionals. The findings are indicative of those qualified responses and does not include any estimation of data. For more information about the survey, contact Chris Wood at cwood@hanleywood.com.