Keat Foong interviews Ronald Hansen, senior vice president of Michaels Military Housing
Managing military housing involves a great deal of team-building with the military service at both local and national levels. There are a number of differing objectives that must be reconciled. In conventional apartments, the owner/operator makes decisions in line with laws and procures but is the sole decision-maker. This difference means that decision-making may be very quick or very slow, depending upon the issue.
In military housing the vast majority of profits are retained in the project. The projects tend to be more sustaining for the longer project lifetime, usually 50 years.
Operationally, the manager must be more involved with resident issues, as the entire community may be affected by deployments or events overseas during these deployments. This is much more dramatic as all community members are linked, more so than in a conventional apartment property.
Do you think military housing will rival student housing as an alternative business opportunity for multifamily companies?
No. The military housing program has reached the end of its solicitation period. There is little further growth opportunity for new organizations.
What are the specific challenges of managing military housing?
Externally set housing allowances by Department of Defense is a key challenge. Unlike commercial markets where rents are set by landlords evaluating market conditions, military housing rents are set by a firm analyzing rents in area, insurance costs and utilities on a set type of unit. However, our units may not match their standard. For example, the junior enlisted allowance is set on an apartment but we are providing duplexes.
What are the specific skills sets needed to manage military housing?
Knowledge of military culture, pay system and customer relations are important, as are conventional leasing and maintenance skills.
How do you break into the business?
The apartment company must be selected from a very competitive selection process.
What is it like working with the government as a client?
The government is really the individual representatives at the local level. The government is represented by a housing professional at the location. This professional creates the working environment and work rules. When you discuss “government” you think of bureaucracy, but on our projects, the housing professional is just like any other client. These local representatives are usually very experienced and professional.
And how is this different from working with a “Mom and Pop” as a client?
The biggest difference is that there are more procedures, more review requirements and more explanations that need to be provided under a government client.
How much growth is there in the military housing sector?
Little. Most projects have already been awarded. There may be another program launched to handle unmarried service members, but that is still far in the future.
Are there any ways in which the product design differs from multifamily housing?
Military housing has a much higher level of amenities, and all housing is essentially Class A-plus.
Is military housing truly multifamily housing? Is it typically single-family?
No, this depends upon the location. At Fort Belvoir, I believe, they have six-plexes, while Walter Reed has three-story walk-ups.
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