If you looked at multifamily builder rankings in 2007, 2008, or 2009, you’d have noticed a trend: Sitting pretty in the top spot was Trammell Crow Residential. So looking at this year’s list, you’re probably wondering if we missed something. Where’s Trammell Crow? Or Wood Partners, for that matter? Where did the dominant private builders of the 2000s go?

Turns out they’re still around, but in 2009, they didn’t put shovels into the dirt. Instead, they turned their focus to asset management, loan maturity management, and leasing and operations. And that has fundamentally changed the look of the MFE Top 50 Builders list.

For one, the decimated financing markets crippled private builders: First, the lack of any real conventional sources of money for new projects limited their ability to finance construction deals. And even when they did earn the trust of a bank, developers weren’t able to unload the properties they had already built—in many cases, they had lost so much value that they wouldn’t qualify for a loan from industry financing stalwarts Freddie Mac and Fannie Mae.

Faced with this, many builders approached their banks asking for loan extensions, or went to their equity partners in search of a capital infusion to keep stabilized properties above water.

But even management and operations proved challenging as vacancy rates soared, making it difficult to lease and underwrite new construction. "In soft markets, multi-family managers compete for residents against unoccupied townhomes and single-family homes," says Mitchell Rosenstein, vice president of finance for Miami-based Carlisle Development Group (No. 47, tied), which built 296 units last year.

So who was left to build last year? Not too many companies, as it turns out. The
No. 1 builder in 2009 was Fayetteville, Ark.-based Lindsey Management Co., which built 2,180 units, primarily for the market-rate and student sectors. Last year, that number would have put them at No. 13. That’s how dramatically things have changed and starts have fallen. In the past, Trammell Crow sat at the top of the list, building 8,194 units in 2008. Even more telling may be the meager starts reported by the companies rounding out the bottom of this year’s Top 50 Builders list. At No. 50 is Indianapolis-based Flaherty &
Collins Properties, which built 254 units. In 2008, the company at No. 50—Rochester, N.Y.-based REIT Home Properties—built 469 units. Home didn’t make the list this year.

Pure market-rate deals were few and far between last year. Winter Park, Fla.-based Epoch Properties (No. 40), started all of its 360 units in one deal called Coventry Park at Southpoint in Jacksonville, Fla. To get that deal in the conventional financing markets, Epoch, which puts about 35 percent equity into most of its deals, needed to have sterling credit. "Conventional financing is still available if you don’t have maturity issues," says Kyle Riva, president of Epoch.

Instead, 2009 turned out to be the year of the niche builder. In addition to Lindsey, this year’s top five builders included Seattle-based Pinnacle, an American Management Services Co. (No. 2), which built 2,150 units of military housing; Irvine, Calif.-based Western
National Group (No. 3), which primarily built market-rate housing; Arlington, Va.-based Clark Builders Group (No. 4), which built a lot of military and affordable housing; and Marlton, N.J.-based The Michaels Organization (No. 5), which built military, student, and affordable housing.

These days—and likely for the next few years—most developers will continue to rely on the Federal Housing Administration’s (FHA) 221(d)(4) program to secure financing for new multifamily development. But under that program, certain restrictions can limit what markets you build in. And, unfortunately, with the disappearance of other sources of financing, there’s a backlog for FHA loans. Some hope that, as the agency works through its bottleneck, shovels will hit the dirt with greater intensity in 2010.

Take Flaherty & Collins, which worked on one 213-unit project, The Boulevard at Anson, located in Zionsville, Ind., through most of 2009. "It’s taken us a real long time to get the loan done," says David Flaherty, company CEO. "We would have liked to have started it last year, but HUD is so backed up that I think a lot more of those deals will come out this year in 2010 than in 2009."

Rosenstein says Carlisle is looking forward to a similar situation. "We’re scheduled to close eight new developments within the next six months," he says. "Financing is lined up, and underwriting is complete."

Still, 2010 won’t be a banner year like the construction heydays of 2006 or 2007. Instead, it will simply be an improvement over 2009. For instance, Trammell Crow plans to start some new construction deals this year.

"We’re looking at a more active 2010," adds Flaherty, who projects starting 627 multifamily units in 2010. "We will have real bank financing options in later 2010 and into 2011. There will be a small step up in starts from 2009 to 2010 and a big step up from 2010 to 2011."