In economics, it’s a tantalizing banality: “A rising tide lifts all ships.” When market conditions in any industry sector shift from worse to better—and seem for a host of reasons as if they’ll get better yet for a good stretch—we tend to want to believe that an improved market will benefit our own business. That this favorable tide will lift our boat. Welcome to the era of the truism that may just not come true.
In the multifamily community, for instance, real life—in the form of real money, real work or lack thereof, real time, and real intellectual capital—has been hacking and chipping away at a for-rent landscape sorely in need of transformative energies, resources, and focus. Add the force of these three populations together: People who’ll pay to rent their homes; people who’ll pay more to rent their homes; and more people who’ll pay more to rent their homes.
The sum is a tide rising, but will it raise all ships?
The smarter companies, AvalonBay among them, won’t bet on it. The smarter enterprises, you see, let other firms think about whether the current, highly selective rising tide of demand, capital, development wherewithal, and local buy-in will buoy them up.
What we see as we look across multifamily’s landscape of leading builders, managers, owners, renovators, and general contractors is strategy and execution that take nothing for granted, let alone a market uptick. The teams of management and associates whose energies, talent, ideas, and sheer will put them on top wanted no less than excellence at every turn in a business where day-to-day contact with a resident or prospective resident is as critical as a long-term plan for a real estate acquisition, which is no less important than solid, trusting relationships with vendors and partners, which is as much an anchor to success as an intranet infrastructure and an Internet outreach.
In other words, no reliance on tailwinds; all assumptions are based on excelling with conditions as visible and tangible as they are.
Have a look at Les Shaver’s revealing “Bay Watch” analysis of the succession plan and strategic plan of AvalonBay under rookie chief executive Tim Naughton. On its surface, AVB’s new, three-tiered brand strategy is all about customers and the segments—age, income, lifestyle, etcetera—that make them more manageable target populations. When you think about it, though, the Ava, Avalon, and eaves initiative is also a land acquisition strategy perfectly calibrated for opportunism amid distress and geographical logic. What’s more, having three different types of units operating within the same metro market arena allows for operational advantages and efficiencies, as well.
The Ava brand itself allows AvalonBay to troll for lots in transitional neighborhoods that younger, urban, first-time renters gravitate to by nature.
This is no company waiting for that rising tide to lift all boats.
With this issue, it would be a sin of omission not to mention beyond-the-call efforts on the part of the team that brought you our MFE Top 50 special report and the insights that come with the data. Apart from his usual mastery in the AvalonBay profile, Les Shaver simply drove our research to an incredible new height with this year’s MFE Top 50 survey. Along the way, he got remarkably quick–learning-curve help and able analysis from the staff’s newest, most welcome additions, associate editor Derek Mearns and assistant editor Jane M. Wolkowicz. Managing editor Chris DeJoy put in an almost obscene effort in time and care to quality-control our report, and Spencer Markey, Scott Crawford, and Gillian Berenson solved all of the challenges to making the data-intensive report come out looking great. A big thank-you to the whole MFE edit team!
So, a rising tide may lift all ships, but we’re not leaving matters to chance. Nor should you.