Region/WEST Q: What demographics and product types do you target?
A: Like all of multifamily, we are faced with two very large cohorts: about 78 million Baby Boomers and about 70 million Gen Yers. The Baby Boomers want to live around shopping and entertainment; Gen Y wants to live on top of it. So, with a lot of the podium and mid-rise, you see the retail and entertainment increasingly as a part of the structure. We have gone from a company that used to build three-story, garden walk-ups in the suburbs to a company focused on transit-oriented development.
Q: What guides your strategy to remain a regional player?
A: California is the fifth largest economy in the world, so it is kind of like investing in France. There is a high propensity to rent because housing is generally not affordable, particularly in the coastal markets that we focus on. When I came onboard in 2002, BRE went as far east as Denver, Salt Lake City, and Arizona. The thought was to have 50 percent of NOI in California but also capture the exodus out of California—when people leave California, they do not go to New Jersey. When we looked at the more commodity-type markets, however, we found that revenue growth over an extended period of time did not amount to much. In our California properties, we had amazing growth—even amongst the highs and lows.
Q: How do you market your company?
A: Branding in multifamily is very difficult because we are not building golden arches or a cookie-cutter product. I was a skeptic when I was working on branding initiatives at Archstone-Smith, but I turned into an amazing convert and have come to realize that a brand is trust. Whether interacting with a partner, an associate, or a customer, BRE will be successful if we consider each issue at hand from another point of view. [By doing that], you'll create a sense that people are listening, that they care, and that they want to do the right thing.
Q: How does California's economy affect your business?
A: The diversity, creativity, and brainpower in this state keep things going. The state is leading on green building and sustainability, and everyone in real estate is trying to get their arms around [that]. As a state, we don't build enough housing. It's a bit weird to say that now, since we are in the middle of a housing correction. While we have pockets where homebuilders have to get through supply, long term, we do not build enough housing, and we do not build enough affordable housing. If anything is going to hold California back, it is going to be its inability to house its residents at an affordable level.