Forrest Stuart MacCormack

You know the signs. Clammy hands. A quickened pulse. That twisting feeling in the pit of your stomach. No, I’m not talking about a first date. I’m talking about the anxiety of opening your morning paper. These days, we can count on the front page headlines to include some combination of the stress-inducing words “layoffs,” “foreclosures,” “recession,” “bailout,” “distress,” or “billions in debt.” Frankly, it’s enough to strike fear in the steadiest of CEOs. The other day, I could hear some of that uneasiness in the voices of the members of Multifamily Executive’s editorial advisory board. We had come together to discuss potential themes and sessions for this year’s annual MFE Conference (which, incidentally, is Oct. 12-14, 2009, at the Bellagio in Las Vegas, so save the date). As they offered up their thoughts, however, they also provided a glimpse into what is currently weighing on their minds.

For some, the mantra today seems to be “protect and defend”—protect revenue and occupancy levels while defending pricing and strategy. For others, the goal is to do more with less. With that comes the need to rein in expenses and motivate employees to shoulder more responsibility, despite being burdened by daily doses of sour news. “We are trying to maximize cash flow for our clients, drive on-site traffic, and [we’re] taking a repair instead of replace approach within units,” said the head of one large, private property management firm.

Still, the word that kept rearing its head again and again throughout the conference call was “capital”—or the lack thereof. “What will the GSEs [government-sponsored entities Fannie Mae and Freddie Mac] look like in three years?” one REIT CEO asked. “I also want some perspective from someone in the trenches able to raise capital, whether it’s from the pension funds or the equity guys,” the CEO continued. “I want someone to say, ‘If you go with pitch X, you won’t get past the lobby. But if you go with pitch Y, you might get 5 minutes in a conference room.”

The grunts of agreement came in unison. One of the advisory board members said she is looking at foreign investors, who seem to be the only capital providers still standing today. A vice president at another multifamily investment and asset management firm turned the conversation to private equity and expressed discontent over the fact that most private real estate funds have been exhausted in the past few years and will likely not re-emerge. If that’s the case, “What entities will fund real estate equity in the future?” he asked.

It was an enlightening conversation—hearing the anxiety, uncertainty, frustration, and, yes, even optimism in their voices. Optimistic about what, you may ask? That they would, indeed, survive.

No, it would not be easy. Nor would it be painless. But these individuals represent the best in the industry. And rather than hiding from or ignoring the economic pressures, they are trying to address them proactively. They are regularly talking with their staffs and their peers about what’s going on. That kind of communication, coupled with a willingness to execute tough decisions, will ensure that they make it through the next 12 months of difficulty.

And the middle-of-the road companies? Those that started with a rush of activity when times were good? Well, they have been on unsure footing since and will likely be unable to regain their place in the market after the economic tides turn.

It’s kind of like a bad first date, after all—one that starts off OK but quickly fails to go anywhere. Those never last, but the ones that cause you the most anxiety and really make you re-examine your priorities? Well, sometimes those are the keepers.