Richard Campo is the CEO of Camden Property Trust, a Houston-based real estate investment trust. The company develops, builds, manages, and owns multifamily apartment communities. Its portfolio consists of middle- and upper-market multifamily communities.

Q: What are the biggest challenges facing apartment firms in the second half of 2007 and in 2008? What are the biggest opportunities?
A: The challenges are the slowing economy and moderating job growth, plus the increased inventory of condos and single family homes available as rentals.
Great demographics—echo boomers and baby boomers—are driving the current demand for apartments. Construction costs are moderating, which is helping to bring projects in on time and budget.

Q: What are you seeing in regard to condos and their impact on rental markets?
A: Competition from condos has had a minimal impact on Camden’s portfolio so far. The impact of condo supply is greatest when entire condo communities come back online as rentals. Renters usually prefer professional management teams over individual landlords, making it easier for real estate investment trusts to compete against one-off condos in the rental market.

Q: What do you see happening now and over the next 12 months with cap rates?
A: Cap rates should remain stable in the high-demand markets, and they could increase slightly in secondary and tertiary markets

Q: Regarding the forecast for mortgage rates, what’s your view?
A: Mortgage rates will probably remain steady for the next 12 to 18 months.

Q: What is your company most proud of among its recent achievements?
A: Our record-setting financial performance last year allowed Camden to reward its onsite employees with bonuses, and establish an employee scholarship program. We currently have the highest employee satisfaction ratings in company history, and one of the top satisfaction ratings in the multifamily sector.

Q: What is a highlight of your plans for 2008?
A: Camden will continue to focus on high-growth markets and keep a $2 billion inventory in the development pipeline. We are looking to expand in Southern California, and enter Northern California if opportunities arise. Development deals during the next year will include more mixed-use, high-density, and urban redevelopment themes.

Q: What’s one thing that every developer should be doing today to prepare for the next five years?
A: Replenish the deal pipeline, and continue to procure new land sites for future development. We must find opportunities to add value, and work through the entitlement process and zoning changes. Look for off-the-market deals and large land parcels that may not attract as much competition.