Multi Housing News February 2012 : Page 7
SUBSCRIBE as you see a bit of a change in the U.S. consumer and in their mentality about owning a home vs. renting. I really do believe this is a circular change, and that you’re just going to see a lot more staying power in the rental business over the next 10 years or so. It should be a very good time to be in our business. What internal programs within Greystar have yielded the most ROI? I would say that probably some of our investments in our technology platform where we are really doing our best to be at the cutting-edge of utilizing everything from our revenue managing program, to expense technology, online buying and our national buying programs. It’s really been the investment in the platform that has given us tremendous ROI. The other thing is, it’s all about the people. The best [strategy] is always going to be having that person in a local market that really knows that market cold. When you think of where your ROI is, when you make great hires—and have great people—that’s ultimately where you have the best return on investment. What challenges do you foresee in the future—for your organization and for the apartment industry? The most valuable component of the business is the people—that really also is one of the challenges to the industry. We are an industry that has historically been more of a mom-and-pop business compared to the commercial side of the business. Now, with the ongoing increased institutional ownership of our business, and the demand for professionalism for fi nancial reporting systems, I think that one of the challenges for our industry is going to be able to keep up and train and educate the people in our industry and draw people out of other industries who can thrive in the type of environment that our industry has. It’s not going to be walking in and someone handing you the keys off of a pegboard to go look at an apartment. Today, you’ve got your cell phone and you walk up to a building and you want to hit an app and fi gure out what units are available. That takes a different infrastructure, it takes a different kind of person and organization to bring that level of sophistication to our business than what we’ve had. I would say there’s another challenge for our industry. Although the supply and demand fundamentals are very good, and we’ve been able to see rent increases across the country, I think the recovery is going to be very spotty across the country based on where you see job growth and income growth. One of the challenges is that everyone likes the forecasts that rents are increasing forever, but at the end of the day you’re going to have corresponding income capabilities of the residents to pay those increased rents, which means they have to have confi dence in their jobs and the economy, and they have to be getting raises and promotions for that to happen. We’re sitting here in a recovery that sure feels like a bit of a bumpy road, and I do think that’s going to have a big impact on how we’re going to recover as an industry. Have rents reached a ceiling, or will they continue to rise? I think it’s been an interesting cycle where really all of the markets went in the tank pretty much at the same time, and the depth of how far rents plunged was really differentiated by the markets that had a huge component of their economy made up of the single-family home construction business. What I think you’re going to see is spotty recovery across the country, and by that I don’t necessarily mean things are going to go negative again, but I think that the velocity of growth from here is going to be dependent on those areas where you see jobs and income growth and household formation really excelling. What you’re seeing is, across the country there are pockets where there are jobs being added. You’re going to see a lumpy recovery. The mar-kets that don’t have that job growth, you’re going to see slower recovery—it’s still going to recover but it may recover slower and may cap out sooner than those markets where you’re seeing little pockets of job growth and mini economic booms. So while ev-erything went in the tank at the same time, getting it back is going to be different, depending on the local economy. Any other forecasts for the market? I think the recovery of development volume is going to be slower than perhaps we thought months ago. I think you’re seeing the lending community be a bit cautious about how much new supply it sees coming back. I don’t really see supply-driven issues on the horizon—yet. I’m sure over time it will happen. It always does. MHN To comment on this story, e-mail Jessica Fiur at jfiur@multi-housingnews.com. www.multi-housingnews.com | February 2012 7 TODAY! Don’t miss an issue of the most widely read publication in the multi-housing industry www.multi-housingnews.com Multi-Housing News reaches more than 20,000 readers with every issue. Visit our web site today and start your free subscription now! www.multi-housingnews.com
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