It's a great time to be a multifamily owner, investor and developer, experts say. But nobody can really predict how many more years the industry can squeeze out of this upturn.
Borrowing the classic baseball analogy, we asked five of the industry's top CEOs "What inning are we in?"
“I’m a fifth, sixth inning sort of guy. Actually, I’ve moved the game back a little bit. I was a little bit more concerned at the beginning of the year, but the forces I’m seeing in play would lead me to believe the game’s gonna last a little longer, or it’s going to be a 10-inning game instead of a nine-inning game. There are three drivers to this: there’s supply, demand, and, then, the wild card, single-family for-sale housing: Is it going to come back? I don’t see single-family or for-sale or condos in most of our markets coming back anytime soon. Mortgage money is tight; the banks have been sued until the cows come home. Single-family and for-sale is really a capital-driven thing. If money is plentiful, people will buy. And I don’t think that spigot is going to open anytime soon.”
—Greg Mutz, CEO, AMLI Residential
“It’s interesting. I was driving to the airport and there was this big discussion—apparently, the incoming commissioner of baseball has convened a panel to figure out how to shorten the game. But we don’t necessarily want the game shortened here; we want this game to keep on going. I don’t know; it’s hard to tell the answer to this question, but it feels like it’s the fifth or sixth inning to me. The question is, are there extra innings involved? Are we going to have a rain delay? I’m not necessarily sure, but I think we’ve got a ways to go given the demographics, given what appears to be the wind in our sail. We’ve been on a great run. We’ll see how long that goes. Most of us with gray hair have seen this movie before—it gets fevered up; then, what happens? So I don’t know.” —Rick Graf, CEO, Pinnacle
“I’d say the fourth or fifth inning. GDP, the gross
domestic product, is hovering between 2 and 3 percent, which is generally
considered by economists to be an OK level; [there’s] low inflation,
50-year-low interest rates, and the inability of banks to lend crazily like
they did [when it] put us in the Great Recession.
So I would say it’s protracted good times—I call it the “Leave It
to Beaver,” 1950s era of the economy. [There’s] nothing out there that really
will derail this economy. And there’s probably nothing out there that’s going
to cause it to be overheated like it was in ’07 before we had the crash.
There’s still too much concern that not enough Americans are back to work. So I
think we could have a two- or three-year run. This is a good period to be
in the business.”
—Ed Pettinella, CEO, Home Properties
—Tom Toomey, CEO, UDR
“From our perspective, it really depends on what markets you’re in. We’re heavily focused in California; we are in 10 states but with a heavy presence in the West and Southwest. And for example, in Los Angeles, we think we’re in the very late innings when it comes to acquisitions. Prices on existing projects are approaching replacement costs—it’s difficult to make the numbers work. But we think we’re in the earlier innings when it comes to development. As of now, we have a dozen different projects between San Diego and San Francisco that we are either entitling or we’re building from the ground up. So we think we’re in the earlier innings when it comes to that.” —Sean Burton, CEO, CityView