Faceless Forces
Everyone recognizes the big names of multifamily–Zell, Sanders, and Terwilliger, just to name a few. But they aren’t the only ones with power. Here are the faceless forces that are shaping the industry today.
Condo Converters: Apartment owners used to be able to determine the value of an apartment with a simple cap rate calculation. Then the condo craze began. Today, if you want to be competitive in a deal, traditional costs and rent estimates no longer apply. Apartment executives who want to buy a rental property must compete against buyers who want to sell the building’s units as condos–and they can offer a lot more money based on their condo-based exit strategy.
Local Government: As real estate cycles come and go, this remains a constant: Local elected officials can be thorns in the side of multifamily companies seeking approvals for projects. The latest twist: local regulations that restrict apartment owners’ highly profitable sales of apartment buildings to condo converters. (Local officials from coast to coast say they’re worried about losing affordable apartments to condo conversion.)
NIMBYs and BANANAs: While local government can cause problems, there are often community groups involved as well. These citizen groups could be up in arms about anything, from how many school seats a new apartment building would require to the number of low-income residents a development might bring to the neighborhood. Regardless of their motives, these groups can embolden local officials to stall or make ridiculous demands on a project.
TICs: Relatively new to multifamily, tenant-in-common, or TIC, arrangements work like this: A TIC fund manager pools money from individual investors (who are often reinvesting the capital gains from a previous real estate investment) to buy apartment properties, giving everyone a piece of the real estate craze without the hassle of toilets and tenants. But many are concerned about the amount of TIC capital flowing into the apartment deal market and its effect on prices. Others are skeptical that these funds have the expertise to manage these properties effectively, despite their high fees. As a result, these TIC situations are “a house of cards,” believes one apartment executive.
Condo Speculators: People have been debating for several years whether the condo market is overinflated, and if so, why. One big reason: speculators. Too many of these people are buying condos with hopes of a quick and highly profitable flip, and it could mean the condo market is in for a big fall. Regardless, these price appreciations have already had serious consequences for apartment people, making both land and existing apartment properties more difficult to buy.
Stat Watchers
This is indeed the information age. And whether it’s large apartment REITs, smaller multifamily firms, or pension funds, everyone wants to know what’s happening with effective rents and other key multifamily statistics. It’s created quite a market for the researchers who provide this information. Here are five of the most frequently cited by multifamly leaders:
- Gleb Nechayev, vice president and senior economist, Torto Wheaton Research
- Hessam Nadji, chief marketing officer and managing director, Marcus & Millichap
- Greg Willett, vice president of research and analysis, M|PF YieldStar
- Ron Witten, president, Witten Advisors
- Mark Obrinsky, chief economist and vice president of research, NMHC
Twenty To Watch
Ask anyone in the multifamily industry who the true power players are, and you’ll hear a handful of names over and over again. For this story, we picked 30 who are truly changing how the industry does business. But we also heard about other people–up-and-comers, established leaders, regional players, and sector specialists–worthy of mention. You’ll find those 20 people here.
- Bryce Blair, chairman, AvalonBay Communities
- Michael Bodaken, president,National Housing Trust
- Richard F. Cavanaugh, president, Fifield Corp.
- Patrick E. Clancy, president and CEO, The Community Builders
- Nevel DeHart, executive vice president, Registry-SafeRent
- Bill Donges, president and CEO, Lane Co.
- Bob Faith, CEO, Greystar
- David D. Fitch, CEO, Gables Residential
- Brian Galla, director of technology, Lincoln Property Co.
- Jim Hurley, portfolio manager, CalPERS
- G. Allan Kingston, president and CEO, Century Housing
- Chris Lee, president and CEO, CEL & Associates
- Laurie Lyons, CEO, BH Management
- David J. Neithercut, president, Equity Residential
- Steve Patterson, President and CEO, ZOM Development
- George Quay, president and COO, Village Green Companies
- Linwood Thompson, managing director, Marcus & Millichap
- Alan Wiener, chairman, American Property Financing
- Leonard Wood, director, Wood Partners
- Dave Woodward, CEO and managing partner, The Laramar Group
