Nothing compares to the sweet taste of victory. Just ask MFE's Top 50 multifamily managers. After several years of negative market conditions, operating fundamentals finally began to favor the apartment industry in 2005 as the economy slowly improved and the condo boom led to a healthy business equation of more apartment demand than supply.

"The recovery has clearly happened," says Ric Campo, CEO and chairman of the board of Camden Property Trust. "It is irrefutable when you just look at the numbers." Rental rates are up across nearly all markets, concessions are low and even nonexistent in some cities, and NOI growth is strong after three to four straight years of flatness.

Riverstone Residential, Trammell Crow's latest spin-off, is run by Christy Freeland and Terry Danner, both formerly of Trammell Crow.
Tim Tadder Riverstone Residential, Trammell Crow's latest spin-off, is run by Christy Freeland and Terry Danner, both formerly of Trammell Crow.

This strong rental market translated into new opportunities for multifamily managers to get deals, increase the size of their portfolio, and bring in the money. One such player: the newly formed Riverstone Residential Group, a spin-off of Trammell Crow Residential run by Trammell Crow's former executive property management team. Riverstone took over Trammell Crow's entire management portfolio (about 55,000 units) late last year to land on this year's MFE Top 50 list. "We are seeing ourselves being able to push rents $25, $30, $40, $50 instead of saying, 'Gee, can you get $5 more?'" says Christy Freeland, Riverstone's co-CEO.

Pushing rents, however, is often easier said than done, since a healthy rental market brings a whole new set of operational challenges. Riverstone, like its competitors, is now re-teaching leasing agents and other employees how to conduct business in an improved market–and pricing power is a key issue. "Leasing is a high turnover part of our business, and most leasing agents weren't around when rents were going up in the late '90s," says Terry Danner, co-CEO of Riverstone. "Our regional and senior management team have a lot of tenure with the company so we remember what it was like, and we are able to impart reality on this to folks and say, 'Let me tell you about the time when you could do this.'"

Growth itself proves to be another big challenge as multifamily managers balance the frequent loss of properties (many to condo converters) with the gain of new ones. No one knows that better than Greystar, which grew its management portfolio by more than 20 percent from '04 to '05. "Last year we added 116 different properties and through dispositions lost 81," says Bob Faith, chairman and CEO of the Charleston, S.C.-based Greystar. "That creates a tremendous challenge for your organization. The only way you can accommodate that kind of turn is to have the infrastructure, the systems, and the talent in place to be able to staff that many properties and handle that many takeovers."

A strong infrastructure and talent base is equally important as third-party managers face increased competition in the marketplace, especially as institutional buyers continue to purchase big portfolios and search for quality fee managers. "It seemed like in the past, people tended to hire a management company because they knew somebody," says Laurie Lyons, CEO of BH Management. "Now you sit down, and it's a huge, heavy-duty interview. They want to see actual results, and they want to talk to clients for referrals." But a little friendly competition isn't necessarily a bad thing. "Competition is good," adds Lyons. "It keeps management companies on their feet."