Phoenix—Despite a generally gloomy view of the U.S. economy, the attendees at this magazine’s annual conference here were upbeat about their own apartment businesses.
The elegant surroundings of the Arizona Biltmore may have had something to do with it. But most of our group seemed to feel that difficulties in getting deals done and the tightening of capital availability are short-term obstacles that will pass within a year. Beyond that, they see smooth sailing on the calm waters of very strong supply and demand fundamentals.
The main message of the conference was that the current difficulties are nothing like the problems that hit multifamily in the early 1990s and will pass within eight to 12 months.
Deal velocity has slowed down a great deal in the past six months, thanks to more stringent lending standards and lower loan proceeds, coupled with more demanding equity investors. Buyers and sellers are often unable to agree on prices.
But the main reason for optimism is simply the fact that demand for apartments keeps rising, while supply has largely been constrained. Even with the economy on a downward track, occupancies in most markets are still solid, and rental income is still growing, albeit more slowly.
The biggest challenge laid out by our speakers was the need to deliver more housing affordable to moderate-income working families. That’s where apartment operators will find the largest demand, if they can figure out how to deliver housing affordable to this group.
The truth is, this industry has had a good long run over the past decade. I have been reporting on the business for 11 years now, and they have been very good years for apartment owners.
Now it’s time for the industry to rise to the challenge of delivering more workforce housing and to take its rightful place as a primary component of “smart growth” strategies, which include energy-efficient, high-density, infill, and mixed-use and transit-oriented development. It’s the wave of the future and the ticket to continued business success.
Of course, it won’t be easy. It will require much more collaboration with various stakeholders in land-use decisions and careful cultivation of your local government leaders to get more assistance and cut through some red tape.
I have enjoyed watching this industry progress and evolve as the founder and editor of this magazine. Sadly, however, it’s time to announce that after 11 years as editor- in-chief, I am giving up day-to-day editorial management.
I have enjoyed getting to know many of you, and I have appreciated your feedback and your suggestions. I especially want to thank R. Lee Harris and our other contributing writers and editorial advisory board members. My staff and I have worked hard to deliver a high-quality mix of useful news, analysis, and business ideas, and I hope you found our material helpful.
As many of you know, I sold APARTMENT FINANCE TODAY, its sister publication, AFFORDABLE HOUSING FINANCE, and their associated conferences to Hanley Wood, LLC, in 2006.
The magazines and conferences will be in the capable hands of Christine Serlin, our executive editor. You can reach her at (208) 288-0399 or [email protected]. I plan to keep writing about big-picture issues of housing and urban policy. I intend to keep fighting for a new commitment to America’s cities and to build public understanding of and support for affordable housing. I expect to start a nonprofit group to help do that.
