Change. There's been a lot of talk over the past year about change. In fact, by the time you read this, the year's most anticipated change—that of the Oval Office—will have come and gone.
As the country begins its collective countdown to January, so will multifamily owners, managers, and developers. Some will be looking to reap year-end tax savings by selling off underperforming assets or idle land. Others will focus on reducing their pipelines as we head into what will inevitably be a slow year for real estate development.
At Camden Property Trust, JPI, and The Bozzuto Group, for instance, the executive management teams have separately reached the same conclusion: focus less on construction and more on operations. Each firm is investing in and drawing the most out of its property management and investment businesses in light of a credit environment that is suffocating projects before they are on the boards. What's more, last month, Christy Freeland, CEO of fast-growing property management firm Riverstone Residential Group, told me that, in response to market conditions, her firm plans to do more growth “organically” in 2009 versus its traditional method of acquisitions.
Linwood Thompson, managing director of national brokerage firm Marcus & Millichap, annually predicts market dynamics at the Multifamily Executive Conference. Last month, he issued his observations during the three-day event in Las Vegas, and he noted, interestingly, that the industry will see moderate revenue growth, tempered investor demand, and strong demographic drivers next year. “Marcus & Millichap is bullish on U.S. apartments,” he announced, adding that apartment execs will see a continued case for optimism and that “apartments are inherently more valuable today than they were 10 years ago.” It's a different environment, to be sure, he said, but the market has changed dramatically and will continue to do so. And those who want to survive through to the other side had best begin to pay attention.
I agree. In fact, if I were prone to placing bets, I would wager that 2009 will be called the year of change, particularly for the real estate sector. My top five predictions? First, the capital markets will get worse before they get better (yes, I said it)—and debt will stay expensive into 2009. Second, we have not heard the last on how the government bailout plan will influence Fannie Mae and Freddie Mac, especially when it comes to their multifamily holdings. Third, the gap between buyers and sellers will widen even further before it normalizes. Fourth, demand for apartments will stay strong, so long as the industry does not overbuild (the odds are good considering the market). And finally, the economy—and the United States—will never again be the same. If that's not change, I don't know what is.
Speaking of change, here at MULTIFAMILY EXECUTIVE, we are also counting down to January. With our first issue of 2009, we'll unveil a face-lift to the magazine that we think will help you find and enjoy the information, data, products, and resources you need faster and more effectively. All of your favorite departments—Apartment Life, Tech Specs, and our monthly regional analysis—will still be there. They will just be packaged in a more reader-friendly format that will allow us to devote more coverage to the in-depth, analytical stories and profiles that you have come to expect from our editorial team. It's exciting for us, and I hope it will be exciting for you.
In fact, it's the one change in 2009 that I will happily bet on.
Shabnam Mogharabi, Editor