Job Growth in Telecom, Biotech, O&G, Emerging Alternative Energy Industry in Denver is Driving Demand for Multifamily Here
- Sep 17, 2008
Jeff Adler (pictured) is the executive vice president and chief operations officer of Apartment Investment and Management Co. (AIMCO), the largest apartment owner in the United States.He previously served as the company’s chief property operations officer and executive vice president of AIMCO Property Operations and several other positions.Currently, he focuses on initiatives in consumer marketing, customer analytics, and information technology at AIMCO. As the 2008 Multi-Housing World Conference and Exhibition kicks off in Denver today, Adler talks to MHN Online News Editor, Anuradha Kher about the state of the Denver multifamily market, how AIMCO is tackling the slowdown in the housing market and how job growth is fueling demand for multifamily in Denver.MHN: In terms of prices and demand how are apartments as well as condos doing in Denver?Adler: The Denver market is doing quite well right now. We are experiencing very high occupancies with very good rent growth. 3.5 percent year-on-year.MHN: What kinds of multifamily projects are in demand in Denver?Adler: We have garden apartments with a few downtown high-rises. All are doing quite well.MHN: What is driving demand in the multifamily sector in Denver? Adler: Job growth. Denver has very good job formation in the telecom, biotech, oil and gas sectors, as well as an emerging alternative energy industry.MHN: What has AIMCO done to tackle the problems through the slowdown?Adler: In Denver, we haven’t really experienced a slowdown. As for Florida and California, we continue to revamp our product and service offering and adjust pricing where required. In Phoenix, we’re riding through this down-cycle pretty well; it’s been a rougher go in Florida, where new rents have come down since mid-year 2006 after a big run in 2004 and 2005. In Southern California, we continue to aggressively redevelop many of our well-located West Los Angeles and Orange County properties. In Northern California, we have been active acquirers especially of properties with solid redevelopment potential.MHN: How will the takeover of Fannie Mae and Freddie Mac affect the multifamily industry?Adler: We think, for now there won’t be much change. However, a bit farther down the road, we can expect Fannie and Freddie to be smaller, according to stated regulator policy. Although multifamily loans are profitable for them both, we expect that they will slowly withdraw liquidity, and expect that to be replaced with other providers over time. There may, however, be some re-pricing. However, offsetting that seems to be a general political reassessment of the past bias towards home ownership versus rental housing. If this emphasis is rebalanced, this will itself be helpful. We may see the government view rental housing as a responsible and worthwhile alternative.MHN: Has AIMCO made any investments in the distressed multifamily market?Adler: We continue, as always, to look for good acquisition opportunities that help us to execute our capital allocation plans by city market. We continue to look for opportunities in Seattle, Northern California, New York, Boston and Chicago.MHN: What is AIMCO’s forecast for the multifamily sector in the next few months?Adler: It is a very delicate balance right now between increased home loan underwriting restrictions and job losses. We can only really see 90 days out, and so far we see sufficient demand to sustain occupancy and modest rent growth.