Q: What are the biggest challenges facing apartment firms in the second half of 2007 and in 2008? What are the biggest opportunities?
A: The biggest challenge is increasing construction and land costs. It’s hard as heck to make new construction apartments work. The traditional approach of build and hold is not the game today. The game today is get it built and sell it.
For us, the biggest opportunity is to have a very strong local presence here in a market that is growing.
Q: With federal regulators trying to force banks to become more cautious about underwriting commercial loans, and subprime home loans going bad, how are you seeing lenders change their underwriting and loan proceeds?
A: The tightening is more on the consumer side. On the commercial side, terms have not changed. There are lots of options.
Q: What are you seeing in your area in regard to condos and their impact on rental markets?
A: The numbers I am hearing is that 25 to 30 percent of condos are being rented out.
Q: What are you seeing developers do to meet the growing demand for workforce housing?
A: It gets back to basic land and construction costs, which make it difficult to meet this need. Municipalities will have to come into deals with creative programs.
Q: Some market analysts say the buying craze is slowing, and cap rates are turning up in some regions. What do you see happening now and over the next 12 months with cap rates?
A: I think they are stable. I don’t think they will go much lower, but I think you can anticipate there will be aggressive appetite out there over the next 12 to 18 months. There is a lot of equity chasing deals.
Q: What is your company most proud of among its recent achievements?
A: On the construction side, we have done a lot of high-profile projects with great clients, condos, student housing, and commercial structures. On the development side, our two mixed-use projects, Sky Loft Condominiums and Historic Westside Village. The completed phases are doing well.
Q: What’s one thing that every developer should be doing today to prepare for the next five years?
A: You must really define the space you want to play in. Get a grip on design, your look, your costs, what the market wants, how deep you want to go with green building methods.
As you do developments, what do you want to stand for and is it relevant for the future? Is it making a difference, not just economically, but is it turning the project area around?
With our strategy of being local, we want city council people to call us. We want to be able to figure out problems.