A year ago, Cedric Langston, the service manager at Gables Sheridan in Atlanta, didn’t have to worry about getting a call at 3 a.m. if someone pulled the fire alarm at the 329-unit mid-rise property. That’s because a year ago, he was in Atlanta-based Gables Residential’s development shop as the assistant superintendent in charge of the finishes. But these days, he’s back on the property level, fielding late night calls. “The only difference is that you have to be on call,” Langston says. “In development, you don’t have the residents to deal with. In maintenance, you do. They can call you at any time of night for an emergency. Other than that, it’s pretty much the same.”
The reason Langston isn’t more riled up about being pulled away from a job that he calls his “passion” to take middle-of-the-night calls about clogged toilets is because he knows he’s one of the lucky ones. Gables’ development activity plummeted nearly 54 percent, from 1,858 starts in 2007 to just 863 starts in 2008. And with that precipitous drop in construction activity, it’s had to let a lot of its development people go.
Indeed, as development and transactional volume has ground to a halt for most firms across the country, they’ve been faced with hard decisions. What do they do with those employees serving those divisions? Unfortunately, the answer is usually layoffs. But when a company has versatile, talented staffers, like Langston, that it can’t afford to lose, it can make sense to slip them into other roles if they have skills and, most importantly, the desire to make the move.
“If you have a known commodity and known performer, why not put them in there and let them get the job done for you?” says David Adelman, president and CEO of Campus Apartments, a Philadelphia-based student housing firm with 20,800 beds.
But switching hats isn’t always easy. Development know-how requires a very different skill set than property management, for example. So before you ask your superstars to strap on new responsibilities, consider their strengths carefully and weigh all the options.
Who to Move—and Where
In most apartment firms, two sectors have been extremely hard hit in this recession—acquisitions and development. In 2005 and 2006, multifamily firms had ramped up their construction activity, starting 352,500 units and 335,500 units, respectively, according to the National Association of Home Builders. Sales volume also exploded, totaling 4,456 properties worth $92.4 billion in 2005, according to Real Capital Analytics, a New York-based research firm. To support this volume, multifamily firms beefed up their staffs, paying for top talent to serve both their development and acquisition shops.
Then, activity screeched to a halt. This year, starts fell to 126,000 units and transaction volume through September has fallen to 493 properties worth $6.9 billion, according to Real Capital. Those large staffs suddenly had very little to do. “There weren’t many options,” says John A. Schaffer, CFO of Contravest, a Lake Mary, Fla.-based real estate firm that started 866 units in 2008, down from 1,617 units in ’07. “If development comes to a standstill, a lot of companies are forced to let people go.”
And let them go they did: The economy overall lost 1.5 million jobs in the construction sector since December 2007, according to the Bureau of Labor Statistics. But in a number of cases, the individuals—not their roles—were salvaged. Most industry observers say that in a down construction cycle, there’s a renewed emphasis on property management, and, as a result, firms began transferring talent from debunk development teams to the asset and property management side.
The examples are everywhere. “We took some development and construction folks and converted them to facility roles,” Adelman of Campus Apartments says. “We also took a couple of the junior development associates and moved them into pure property management.”