By now, everyone has seen the photographs and the television footage. People being airlifted from roofs as water encroaches upon the top story of their home. New Orleans residents leaving the Big Easy by foot with all of their belongings–or the ones they could grab–in knapsacks. Newly homeless people desperate for food, water, and shelter. Yet these people were the lucky ones: They survived Hurricane Katrina, a storm that may go down as the deadliest and costliest natural disaster in American history.
The late-August disaster left hundreds of thousands of people in Louisiana and Mississippi homeless, but before then, it challenged apartment owners with properties in the storm's path. Lane Cos. in Atlanta manages two properties in Pascagoula, Miss., an area pounded by the storm. Lane managers did encourage residents to go to shelters, but it was a hard sell, says Bob Landis, president of Lane Management. "With the communication difficulties, they haven't had the ability to call their friends and make other arrangements," he says.
But even places that escaped Katrina's damage were affected. Displaced residents of Louisiana and Mississippi dispersed throughout the country in search of places to stay, leading to housing crunches in markets like Houston. Finding shelter was not an easy task. Many survivors had little to survive on beyond whatever they escaped with from their homes. But apartment companies have been stepping up to help, says Jim Arbury, senior vice president of government affairs for the National Multi Housing Council in Washington, D.C. "It has been overwhelming," he says. "Everybody wants to do the right things. Everybody has signed on to no gouging, waiving any number of fees, minimum security deposits, and short-term rents."
Arbury points to Camden Property Trust in Houston, which donated 30 units and free utilities to the United Way to provide for hurricane evacuees. For anyone leaving the areas hit by the storm, Camden offered flexible lease terms with no penalty for leaving early, no application or administration fee, a surety bond of $87.50 rather than a security deposit of a month's rent or more, and the loosening of credit checks.
"We're still qualifying all individuals and running criminal background checks," says Laurie Baker, regional vice president for Camden. "We still have to respect all of our residents. They're thrilled we're moving these people in but want to know who their neighbor is."
Another firm, Harbor Group International in Norfolk, Va., is donating two apartments in each of its 24 properties free of charge to hurricane survivors. For others, it's offering reduced rents and no application fees. Though Harbor is running background checks, it's not running credit checks. "Providing shelter is one of the basic human needs," says Doug MacFarland, director of multifamily management for the company. "That's something these folks need. If we end up with some bad apples, I still figure that we will help out a lot more people than will get us hurt."
Apartment companies who own affordable units faced obstacles in their effort to assist Katrina victims. Those units require verification of household income, security deposits, minimum rent payments, and specialized leases, and they generally prohibit short-term rental periods. These restrictions create a headache when trying to help hurricane evacuees, who may not have the paperwork necessary to verify much of anything.
NMHC and other industry organizations have asked Congress for an emergency waiver that would apply to affordable-unit leases signed between Sept. 1 and Nov. 1, 2005, and would remain in effect until April 1, 2006, unless extended. "We want to get a lot of the proof-of-income restrictions waved for a short period of time so that people can be housed in suitable apartments," Arbury says.
–Les Shaver
How to Help Katrina Survivors
- www.hurricanehousing.net – For companies with apartments or housing available Louisiana or Mississippi.
- www.swern.gov – For companies with apartments or housing available outside of Louisiana or Mississippi.
- www.nmhc.org – To find model lease documents for hurricane evacuees and other pertinent information.
- www.fema.gov – To find information on temporary housing.
- www.apartments.com/katrina.htm – To list any special discounts or apartments available for hurricane evacuees.
Money as Motivator
Apartment firms consider commission-based pay.
To Dave Woodward, the compensation structure for leasing agents is one of the great ironies of the apartment business.
"We call these leasing people 'salespeople,'" says Woodward, managing partner and CEO for Laramar Group, an apartment firm based in Chicago. "In reality we don't treat them like salespeople, compensate them like salespeople, or train them like salespeople."
Others agree. "The vast majority of leasing associates have a pay structure where anywhere from 70 [percent] to 90 percent of their compensation is fixed," says Jack Callison, senior vice president of national operations for Archstone-Smith, an apartment REIT in Englewood, Colo. "You have a 10 [percent] or 15 percent bonus based on a variety of metrics, including performance."
WoodwardPhoto: Roark Johnson It doesn't always add up to very much. Leasing agents earn an average of $26,200 annually, according to NMHC's 2004 compensation study. (Watch for the 2005 results in an upcoming issue of Multifamily Executive.)
But that could soon change. Several public apartment companies, among them Archstone-Smith and United Dominion Realty Trust, are reviewing their compensation structures, although they won't reveal more details. Laramar, which is private, is actively pursuing a commission-based program. "We're going to change our organization," Woodward says. "To be a sales organization we're going to lower hourly wages and dramatically increase commission. We're going to pay our commission as a percentage of the total transaction."
He believes that the shift will result in less turnover among leasing agents (particularly the ones who are good at sales and might be tempted to look elsewhere for better commissions) and more focus on customers. "When a phone rings or e-mail comes in, it will be worth $300 or $400, so they will jump all over each other to get that business," he says. "The best salespeople will clamor to work on Saturday and Sunday. They will want to work extra hours because they want extra commission."
–Les Shaver
Spreading Out
The popular consensus in multifamily right now is the idea of New Urbanism, or people moving back toward the transit, restaurants, and entertainment of America's cities. While that may be true, the Harvard Joint Center for Housing's The State of the Nation's Housing 2005 report says that the vast majority of 20 million units constructed between 2005 and 2015 will be built in low-density areas. Until changes in policy encourage higher density, this trend won't change, the report says.
–L.S.
Head of the Class
Jorge Perez, CEO and chairman of the Related Group of Florida, has topped the multifamily builder charts years, landing on the cover of MFE in January 2004 as Builder of the Year. Now the national mainstream media has taken notice. TIME Magazine named Perez one of the 25 most influential Hispanics in the United States in its Aug. 22, 2005, edition, calling him "The Donald Trump of the Tropics." The magazine said Perez's company generated $2.1 billion in revenue in 2004, placing it on top of the Hispanic Business 500.
–L.S.
Extra Fuel
The National Association of State Energy Officials partnered with The Enterprise Foundation's $555 million Green Communities initiative to create 8,500 affordable, energy-efficient homes. The association will provide funding, training, and educational activities to promote energy efficiency at state and local levels.
–R.Z.A.
Green Giving
Wondering why your colleagues are sporting bright green bracelets? Apartments.com distributed 5,000 bracelets to multifamily industry professionals this summer. But these bracelets are much more than just a fashion statement. For each bracelet distributed, Apartments.com contributed one dollar to the Ronald McDonald House Charities of Chicagoland and Northwest Indiana, for a total donation of $5,000.
–R.Z.A.
Easy Answers
On-site property management staffers no longer have to review and analyze criminal records, thanks to a new product from First Advantage SafeRent. Registry CrimSAFE analyzes criminal reports and provides a clear accept/decline leasing decision based on the property owner's predetermined criteria. "It takes all of the confusion out of trying to train the site people on all the various [criminal] codes from all of the various states," says Nevel DeHart, executive vice president of First Advantage SafeRent. Time savings is one of the biggest product perks for property management firm Greystar Southeast, a division of Charleston, S.C.-based Greystar. "It literally has been drilled down to 20 or 30 seconds to wait for the report to process," says Cathy Phillips, the company's systems administrator.
–R.Z.A.
Online Changes
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Waiting Game
Companies anticipate changes to the Americans With Disabilities Act.
For the first time since it was established 15 years ago, the Americans With Disabilities Act is getting an overhaul, and the multifamily industry is watching closely.
Jeanne Delgado, National Multi Housing Council The proposed changes are now published and awaiting approval by the Department of Justice, a process which could take several years as apartment firms wait to see when the new rules will take affect and which properties will be affected.
As uncertain as that sounds, "I don't think there is any controversy over the changes," says Jeanne Delgado, vice president of property management for the National Multi Housing Council. "The bigger concern is when they will become effective, and will current properties and those currently under construction be grandfathered." NMHC advocates grandfathering those properties already in compliance with current rules and opposes any attempts to require retrofitting. NMHC also is asking for a minimum 18-month effective date once the new rules are approved.
Currently, ADA accessibility guidelines apply only to the public areas of both privately owned and publicly funded residential buildings, such as the leasing center and common spaces that are open to the public. One of the bigger proposed changes calls for publicly funded housing units to be governed by the ADA (they are currently regulated by the Uniform Federal Accessibility Standards). The changes also make the current guidelines more consistent with model building codes, such as the International Building Code.
The existing ADA guidelines remain effective until the new rules are approved. While owners and developers should familiarize themselves with the proposed changes, Joan Stein, president and CEO of ADA consulting firm Accessibility Development Associates, encourages people not to fully adopt the new guidelines until they are approved. Some of the proposals could change before they are finalized, she cautions.
–Rachel Z. Azoff
Executive Feedback
How are you coping with the shortage of cement?
Rocereto A: "The cement shortage has not affected BRE, because we work with large contractors who have buying power and purchase in volume. We are, however, anticipating some price increases this year." –Pete Rocereto, vice president, construction, BRE Properties
Hutchinson A: "I really haven't seen a concrete shortage and haven't experienced any shortfall in product. We have eight projects underway, including large garden-style apartments. We use concrete in each one. We also haven't experienced a price change. We buy our concrete slabs and lock down the pricing when we start the project. We also have not experienced any delays." –Paul Hutchinson, interim president, Lane Realty Construction
Bench A: "[With] an increase of $15 to $20 per yard of concrete, the cost increase for a finish unit equates to about $2.50 per square foot. Actually, the direct cost increase of concrete is not the killer–it is the availability and delays caused by the lack of concrete that costs big bucks. Concrete is a part of almost every critical path in the scheduling process. If you can imagine the interest-carrying cost on a delay of 20 days for a $35 million project due to concrete shortage, now you're talking about big money." –Scott Bench, president, EastCoast Communities
Project of the Month
Gables Beach Park, Tampa, Fla.
EDI Architecture had a formidable challenge at hand: The Houston-based architectural firm already sketched out plans for a high-rise multifamily residence in Tampa, Fla., called Gables Beach Park. But local officials and residents didn't quite embrace the idea of a new high-rise towering over their neighborhood.
CHANGE OF PLANS: The architect reconfigured this project to make it low-rise.Top and bottom photo: Courtesy EDI Architecture The property's site already had high-rise office buildings and single-family homes located nearby. EDI's original blueprints called for an 11-story high-rise complex complete with 312 units and 55 townhouse units. But when area residents expressed concerns about increased traffic, EDI scrapped its plans and worked extensively with local officials and residents for a retooled project that would complement the flavor and scale of the site's surrounding area.
The firm reconfigured Gables Beach Park into a three-story, 166-unit luxury townhouse community built by Gables Residential. Brit Perkins, a principal at EDI, said changing up the plans was "not difficult at all," adding that he and his team designed the project with a Mediterranean feel inspired by famed architect Addison Mizner.
Despite revising the development from high-rise to low-rise, EDI and Gables Residential were able to stay on schedule. The companies used a method called the "tunnel form system," a time-saving technique often used in high-rise construction that allows walls and floors to be poured simultaneously. Gables Beach Park was completed in August 2004 and took about 13 months to finish.
The development is a hit with young urban professionals. The luxury townhouse units span 1,320 to 2,496 square feet and include trendy interior elements such as hardwood floors in the living and kitchen areas, gourmet kitchens with dark wood cabinets, granite countertops, functional islands, crown molding, direct access garages, and bathrooms with Roman tubs. Rental prices run between $1,325 and $2,215.–Abby Garcia Telleria