Fundamentals Plus Innovation
- Apr 02, 2009
Susan M. Ansel is chief operating officer of Atlanta-based Gables Residential, one of the largest apartment operators in the nation. Under her stewardship, Gables Residential manages more than 37,000 apartment homes in 140 communities, most notably in Atlanta, Houston, South Florida, Austin, Dallas, Washington, D.C., San Diego and Southern California’s Inland Empire. Ansel recently shared her thoughts with MHN Contributing Editor Jeffrey Steele. She describes her company’s green initiatives at the site level and beyond, the keys to resident retention and the importance of returning to core business fundamentals during challenging economic periods.Describe Gables Residential’s green program and corporate initiatives.As a natural extension of our corporate mission, “Taking Care of the Way People Live,” Gables is dedicated to “Taking Care of Our Environment.” We are mindful of our impact on the local environment and have launched a host of green initiatives to help do our part. Every potential new acquisition, existing asset, ground up development or major renovation is evaluated in terms of its sustainability aspects. These initiatives represent the first steps toward what we hope will be greater emphasis on going green by our company and industry.We believe there is a two-fold importance of our green initiatives. First, we are committed to being a responsible corporate citizen and real estate developer. Incorporating sound green and sustainable practices into our business helps achieve that commitment. Second, we understand the changing needs and concerns of our residents, customers and associates. As awareness and need for green products and services increases, we must adapt our business to meet those demands.Gables Residential is working toward green initiatives in four key areas: new development and construction, ongoing onsite operations and maintenance, corporate office initiatives, and associate and resident awareness.Several newly delivered and all in-development Gables communities include features built to either U.S. Green Building Council LEED (Leadership in Energy and Environmental Design) certification standards, or regional and local sustainable development organization standards.But green building is not new to Gables, as we developed the first green apartment community in Austin, Texas in 1997 as part of the city’s early green building program. We are just as focused on going green in the ongoing operations and maintenance of our existing portfolio. Operations policies and procedures have been updated onsite to improve such areas as energy efficiency and the reduction of office waste. Our maintenance teams have worked with vendors to create green buying guidelines and source green products such as recycled-fiber carpets, low-emission paints and sealants, chlorine-alternative pool products, and environmentally friendly cleaners and chemicals. A few of the onsite green initiatives we have begun include:• Sourcing low-VOC paint and setting paint buying guidelines in all regions• Upgrading to recyclable or recycled-fiber carpets for replacement and new installation• Developing green product guidelines and catalogues for cleaning and maintenance supplies• Using high-efficiency and/or compact fluorescent lighting in common areas• Installing lighting timers and sensors in offices, models and common areas• Fitting all toilets with water-saving devices.When do you think we’ll emerge from the recession?I think 2009 will be a challenging year throughout, and that the U.S. economy will begin to turn around in 2010. I believe it will be difficult to see much evidence of that turnaround in the industry’s operating results until the second half of 2010 and early part of 2011. What is Gables’ corporate strategy for thriving during the recession?The slowdown in the U.S. economy and the numerous joblosses will certainly negatively impact the multifamily housing industry in 2009. During challenging economic times, Gables believes the way to thrive begins with making certain the team is focused on the core business fundamentals. From a property operations point of view, this means focusing on the basics—a strong leasing effort, increasing renewals and tight expense controls. Any asset upgrades and capital projects are evaluated based on value-add opportunities.For new projects in development, this means focusing on cost control and maintaining production schedules. It also means very careful underwriting for any potential new development undertakings. For our central services groups, we’re looking for ways to improve efficiency, while continuing to deliver great products and services. From a day-to-day perspective, it is important that everyone knows what is expected of them so they have the opportunity to focus and achieve those objectives.It is also leadership’s responsibility to look for new opportunities. During tumultuous times, opportunities are created. Companies that spot those situations earliest are those that not only survive, but create new success for the future.How do you think the Obama administration will impact the multifamily industry?The new administration and the new Congress seem to be embracing the concept of a more balanced housing policy, which is something the multifamily industry has been espousing for years without finding many supporters. If this sentiment continues to hold sway, it will be a positive for our industry in the long run. In addition, the Obama administration has included items in the stimulus package and the new budget that address affordable housing programs and needs. I also believe anything that the Obama administration can do to improve the overall U.S. economy will have a positive impact on the multifamily industry.Is demand slowing for corporate apartment programs in the current economy?Demand for corporate apartments has slowed. The declining demand is impacting not only occupancy but is also putting stress on current pricing models. The slowdown is impacting each of our markets equally and seems to be reflective in general of a slowdown in corporate travel. With the challenging economic conditions, we believe there is pressure on many companies’ travel budgets. And this is reflected in the current activity we are experiencing in our corporate homes division.Interestingly, 2008 was one of the strongest years our corporate homes division has ever experienced, and this was driven primarily by a strong demand cycle. We began to see evidence of a decline in the fourth quarter of 2008.What’s your strategy for retaining residents during the downturn and beyond?Resident retention is always an important issue to monitor and control in any economic cycle. In periods of increasing rents, a higher level of turnover is often not a negative factor as it enhances a property’s ability to improve the rent roll. As a balance in a slowing economic cycle, it is often more beneficial for a property to have a lower level of turnover in an effort to reduce vacancy loss and redecorating costs. Given the current economic condition in most of the markets in which Gables is operating, the focus for our operations team is to minimize resident turnover in 2009. As such, Gables has structured creative resident retention programs that reward resident tenure and help promote renewals. We’ve found that simple gestures can go a long way in helping residents feel appreciated so that they decide to stay in their current homes.Our program includes such things as carpet shampoos, apartment painting, front door facelifts, lease term flexibility and ancillary services.In addition, renewal pricing strategies and lease terms are evaluated to maximize property value and current cash flow. Great customer service is always the best way to maximize a property’s resident retention, and this remains at the core of our daily efforts and activity.What NOI tips can you share with MHN?Growing revenue will be difficult in 2009 from current revenue sources. To increase revenue, look for new ancillary services or a new way to provide those existing services in a bundle that is better or more convenient for
the resident. Smarter, more efficient ways to do the job, and carefully controlling variable expenses will be critical to maximizing NOI in 2009. Minimizing expenses is always a key factor in maximizing NOI, but in times when rent growth is slow or non-existent, we will have to look for more creative ways to achieve expense control. Gables has made it a key focus and we are challenging our associates to find new ways to help achieve this goal. By encouraging the whole team’s involvement in the process we believe we can accomplish greater results. To comment, e-mail email@example.com.