The big chill

Multihousing brokers are certainly feeling the pinch. During a panel discussion at the Apartments 2008 conference in Los Angeles, hosted by Real Estate Southern California and GlobeSt.com on October 2, brokers from CB Richard Ellis (CBRE), Hendricks & Partners, Marcus & Millichap, Grubb & Ellis/BRE Commercial, Transwestern Multi Housing Capital and Sperry Van Ness all said their sales were off significantly from the previous year.

CBRE Executive Vice President Laurie Lustig-Bower reported a 50 percent drop in transaction activity from the $1 billion in sales her seven-person team closed in 2007, and she expects next year will be worse. Curtis Palmer, managing director for Transwestern Multi Housing Capital Advisors, reported his sales dec
READ MORE »

Lessons learned

Today's financial crisis is hardly that grim, though it does share some similarities with the economic collapse of the 1930s -- both were preceded by a housing boom, a long period of cheap credit and a falling stock market. But those same similarities may offer some reassurance.

What was then economic calamity is today a history lesson. This time, America has been through it before, and there's a guide, at least for mistakes to be avoided as the nation's leaders try to prevent another catastrophe.

Economists have spent decades dissecting the Great Depression. Their findings demonstrate the crippling effect fear has on economic decisions, the tremendous cost of not acting quickly and the risk of damaging the larger economy in efforts to
READ MORE »
Back To Top

Secrets to building a happy team

Building the best team is critical to the success of your community. Hiring and retaining successful employees improves customer service, resident satisfaction, occupancy rates and most importantly, profitability. Today, successful apartment operators use ongoing email- based surveys to identify staff perceptions, address employee concerns, measure performance and improve retention.

Every year multifamily operators spend thousands of dollars hiring and training new staff. According to the 2007 National Apartment Survey of Compensation and Benefits Practices conducted by the National Multi- Housing Council, the typical management company faces a 43 percent employee turnover rate. However, this rate drops significantly among owners who meas
READ MORE »
Back To Top

Talking trash

The one-stop waste management and sustainability company that now takes out the trash at more than 200,000 units across the country, was founded in 1995 by CEO Mike Ferris, VP of Sales Dave Magrisso and COO Brent Smith, with the goal of providing an environmentally responsible system for waste management that would be an attractive amenity for apartment communities and would benefit their bottom lines through ancillary income generated by the service.

Valet Waste's three founders believed their plan for keeping trash out of sight and under control would increase curb appeal and that door-to- door trash pickup almost every night of the week, combined eventually with recycling, would bolster resident loyalty and improve resident retention.
READ MORE »
Back To Top

That which defines us

Maybe I should be afraid, but I'm just not into it. Fear, that is.

I can, in no way, trivialize what's happening in the financial markets or certain segments of our economy, but it is all relative. And while "It's all relative" does not make as good a headline as "All is lost," it is the truth.

Global losses from the current financial crisis were recently estimated at a mind-bending $1.4-trillion. It is the biggest financial meltdown in history in terms of value. But the doom and gloom, as well as getting into the weeds of Sarbane-Oxley, new financial instruments, risk-reduction schemes, and their far-reaching grip on the term "value," seems to lose punch when laid against the size and strength of the U.S. economy.

U.S. financial inst
READ MORE »
Back To Top

Tin can plant gets new life as apartments

For about half a century, the stocky brick building that stands on the border of Remington and Charles Village in Baltimore, Md. languished as tenants and owners came and went. Redevelopment efforts stalled leaving pigeons, graffiti, vandals and the elements to steadily wear on this one-time tin can manufacturing plant.

But for the past several months, neighbors have watched as workers in hard hats cleared decades worth of trash from the 80,000-square-foot building, which was built in 1874. Workers have installed new plumbing and are working on renovations that will maintain the building's status as a historic structure.

The builders are following the vision of developers Donald Manekin and his son, Thibault, who describe the work as an
READ MORE »
Back To Top

Some REITs like small

All may not be completely grim in the investment world.

Even in the throes of what some are calling the worst financial crisis since the Great Depression, some real estate investment trusts -- those owning apartment buildings and self-storage facilities -- have held up better than most stocks.

For the year, the storage sector was down by 4.3 percent, while apartments slid 14.15 percent. The broader universe of equity REITs, meanwhile, suffered a 29.6 percent decline, while the Standard & Poor's 500-stock index plunged 38 percent.

And during the third quarter, in fact, the storage and apartment sectors actually posted strong gains. The storage REITs surged 19.3 percent, on average, for the quarter, and 33.8 percent, on average, for the
READ MORE »
Back To Top

Holding the line

The House of Representatives passed a financial rescue plan, now called the Emergency Economic Stabilization Act, on October 3. The bill was signed into law the same day by President Bush, who warned it would take time for any benefits of the plan to trickle down into the economy.

Expanded to 400 pages from the three-page version that was drafted by Treasury Secretary Henry Paulson and rejected by the House on September 30, the final plan was approved 263 to 171.

The legislation gives the U.S. Department of Treasury the authority to buy bad debt mortgages from struggling financial companies at above- market prices in exchange for warrants that could be later exchanged for those companies' non-voting stock. The government also can make d
READ MORE »
Back To Top

Lemons to lemonade

Such value-added plays spell success for KWMF, even in these turbulent times. A case in point is Summer House, a rental community in Alameda, CA. The following explores the process by which KWMF turned lemons into lemonade. It also illustrates how the ability to see a project's potential, as well as the tenacity to work through challenges can pay off.

The project, previously known as Harbor Island, is a 615-unit apartment community in Alameda, CA, an island community immediately adjacent to Oakland. It was originally built in 1965 as low-cost housing for nearby Alameda Point Naval Air Station. Situated on 20 acres, Summer House is one of the largest multifamily properties in the East Bay area of Northern California.

The property had a c
READ MORE »
Back To Top

Vacancies rise as job loss impacts renters

The U.S. apartment vacancy rate in the third quarter rose to its highest level in more than three years, as the economy weakened and diluted the greatest source of apartment demand -- job growth.

Job losses outweighed the increase in demand for apartments from former or would-be home owners, said Sam Chandan, chief economist of real estate research firm Reis.

According to Reis' results for July-September, the U.S. apartment vacancy rate rose 0.1 percentage points to 6.1 percent, the highest vacancy level since the second quarter 2005, when the U.S. housing market reached its peak and would-be renters were borrowing big to buy homes.

"Whenever the economy is slowing, when the job market is weak, particularly for young people, it underc
READ MORE »
Back To Top

An inside job

As life-long employment fades and the workforce becomes increasingly mobile, many companies look to hire skilled, experienced workers to improve productivity quickly. Those workers, however, often bring baggage from prior jobs that can negate the benefits of their prior experience.

Companies might be better off investing in training fresh recruits with little experience in an industry so the companies can have more control over how the new workers adapt to their new employer's corporate strategy and culture. The research found that training may be more productive than paying a premium to hire experienced workers who might come from a different sort of corporate environment.

"Human resources managers will want to hire people who worked
READ MORE »
Back To Top

Denver delivers

Transaction velocity has maintained a steady pace during the last year, fueled by Denver's healthy long-term prospects," Adam Christofferson, Marcus & Millichap's regional manager for Denver, said.

High foreclosures of for-sale housing also have helped the local apartment market, keeping would-be homeowners in rental housing, the report said.

The local apartment vacancy rate is expected to end the year at 6.5 percent, an increase of 20 basis points over 2007, because completions of new apartment properties outpace renter demand. A basis point is one-hundredth of a percentage point.

But investors are buoyed by the higher apartment rents expected for the year, despite higher vacancies.

Asking rents are expected to rise -- 3.5 percent
READ MORE »
Back To Top

Beautiful Ohio

Out of the apartment-construction business for about five years, Don Kenney has formed a company called Metro Development that will build several apartment complexes around central Ohio. Kenney's Village Communities condominium-development company, meanwhile, is slowing the pace of its activity in favor of tapping what is now a strong rental market.

In December 2007, Metro Development began work on Winchester Park, a 344-unit apartment complex at the Rt. 33-Hamilton Road interchange. A second phase is under way there, and construction has begun on the Residences at Edgewater Place on the East Side and the Residences at Riverpointe Place in Westerville.

With the tough lending standards being imposed by banks and the general downturn in h
READ MORE »
Back To Top

Workplace conflict: productivity killer or creative mojo

According to a recent study, workplace conflict is rampant throughout the business world, with U.S. companies spending more than 2.8 hours per week or $359 billion in paid hours in 2008. In many cases, it has a severely crippling effect on productivity and morale. However, the report also found that when properly managed, conflict actually benefits organizations, leading to innovation and motivation.

The study, which polled thousands of workers worldwide, reveals a substantial cost of workplace conflict. It found that workplace conflict is nearly universal, with 85 percent of all workers having dealt with it. Employees on average spend 2.1 hours a week dealing with conflict. However, this figure rises to 2.8 hours in the U.S., where rough
READ MORE »
Back To Top

How to win in a recession

During the 2001 recession, just over half the 400 companies studied improved their gross profit margins during the year, according to Diamond Management & Technology Consultants, of Chicago. The winners' secret: Targeted rather than blanket cost-cuts, combined with a willingness to invest strategically.

By the end of the recession, those companies had grown margins by 20 percent, measuring improvement from 1998 through 2000 combined, compared with 2002 through 2004 combined. They also created more than $350 billion in market value over the same time period, while the rest of the firms destroyed more than $200 billion. The study looked at companies with more than $100 million in annual revenue.

Volatility creates opportunity, says John S
READ MORE »
Back To Top

The great urban-rural divide

Political scientists, historians, pundits and news analysts remain fascinated with political maps and frequently note geographic patterns in electoral behavior. The study of political geography within political science has its roots in the work of the late V.O. Key, Jr., whose best known work, Southern Politics in State and Nation (1949), has become a widely read classic across many fields. Key was among the first to recognize that geography mattered because voters who lived in close proximity to each other often behaved the same way, in spite of their economic and demographic differences. Political geography is not just traceable to differences in the composition of local populations, but is also rooted in how those populations communicate
READ MORE »
Back To Top

Identity signaling

When the going gets tough, companies would be well advised to consider outifitting their workers in uniforms. That's the wisdom that UniFirst Corp., a Wilmington supplier of business uniforms and work-wear, said it has gleaned from research by the University of Pennsylvania and Stanford University.

Conventional wisdom says "clothes make the man or woman." But a published study by researchers from the University of Pennsylvania and Stanford University suggests it's more about how today's competitive-minded companies use colors and emblems to personalize their employee apparel that truly gets them noticed -- a fact that takes on added significance during tough economic times.

"It's what researchers refer to as ‘identity signaling,'" says
READ MORE »
Back To Top

Key issues

Multifamily properties have a unique set of security issues. The safety of residents and the protection of the property itself are reliant on how well the apartment manager safeguards the community's keys.

The lock-and-key systems most commonly used by apartment communities today are master-key systems, and inherent in those systems is the potential threat posed by the ability of a master-key holder to gain access to the entire community. Master-key locks are designed to be opened by an individual key, as well as the master keys that also open other -- and sometimes all -- doors within the same apartment property.

The benefit of a master-lock system is that it allows maintenance staff and managers to access the entire property without h
READ MORE »
Back To Top

Who killed AIG?

The solons of regulatory power, the great minds who gave us -- to pick two recent examples -- Sarbanes-Oxley and the massive post-Enron accounting overhauls, are coming down from the hills for another round of overkill. It turns out Sarbanes-Oxley, which they brought in on a wave of anti-corporate harangues and promises to end "greed and corruption" once and for all, has been useless, a total waste of time and money. Sarbanes may even have made things worse if, as seems possible, its bureaucratic fix-it kits gave all players a false sense that there was no need to pay much attention to details.

Look at AIG. In a wave of corporate head-hunting under Eliott Spitzer, AIG was dragged through a public flogging, its illustrious CEO, Hank Greenb
READ MORE »
Back To Top