Ron Terwilliger, former CEO of Trammell Crow Residential, retired a few years back after a nearly 40-year run in the industry. But he stays active as advisory director of the Trammell Crow Residential Management Board and by speaking publicly about his success. He'll share his insights as a keynote speaker at the Apartment Finance Today Conference, April 2 and 3, in Las Vegas. For now, he offers his predictions for the upcoming economic cycle and explains why he's spending his retirement giving back.
How can multifamily weather the storm in an unpredictable economy?
You really need to understand those factors that affect supply, specifically what the right amount of building is. We'll probably overbuild rentals again, because we're building at what we think is the right pace until the economy falls and demand drops. But what I always argue is to be in the business with the understanding that there's going to be another cycle; overbuilding will show up and rents will drop. Risk management for Trammell Crow was always key. We tried to avoid overleveraging because you need a significant equity cushion through a downturn.
What are your predictions for the upcoming economic cycle?
The thing that's different this time around is that jobs are not as strong, but offsetting that, most likely, is the difficulty of getting a mortgage. You've got an awful lot of positive things in the near term for the apartment business: strengthening rents, limited new supply, good demographics. People who have the margin and might have chosen to buy are choosing to rent longer. So, overall, it's a terrific time to be in the apartment business. How long this will last, I don't know, but it looks like it will be a good run in upcoming years.
What's the market to go after now?
I think it's a bifurcated market right now. When I started, back in the early '80s, we were building mostly garden-style apartments. But as the country got more and more congested in the past three decades, young people with good jobs became much more interested in city living, so our industry has seen a movement back to the urban core. I also see a tremendous and increasing need for affordable housing. At a minimum, we need 3 million new apartments over the decade, and, simplistically, I think half of them need to be affordable.
How has your work with Habitat for Humanity influenced your career?
It's more that my career influenced my focus on nonprofits. Between my development career and exposure with Habitat, I 've begun to understand better the difficulty people have had in getting a house they can afford in a safe neighborhood. When I retired, I decided to devote my time to affordable housing. Individuals who have benefited from their career need to help those who have been less fortunate.