“The apartment industry has historically been dominated by smaller local and regional firms, particularly in the area of property management,” noted Doug Bibby, National Multi Housing Council president. “But that is clearly changing as we see the emergence of several powerful national property managers. These firms are using economies of scale to overcome thin margins and to refute the conventional wisdom about property management being a low-growth area.”
“Not only are they surpassing investor and client expectations,” Bibby added, “they are raising the customer service benchmark for the industry. By leveraging their national platforms to recruit, develop and retain the best available talent, they are bringing a new level of professionalism to the sector and transforming the renter’s experience.”
According to the National Multi Housing Council’s 19th annual ranking of the 50 largest U.S. apartment owners and the 50 largest U.S. apartment managers there were few changes in the top of the NMHC 50.
As a matter of fact, the NMHC reports that for the first time in the survey’s history, the top 10 firms on last year’s NMHC 50 owners and NMHC 50 managers lists made the top 10 again this year, with only small shifts in the order.
Remaining as the nation’s largest apartment owner for the third year in a row, the Denver-based Apartment Investment and Management Company (AIMCO) tops the list even after a net reduction of more than 14,000 units. AIMCO now owns fewer than 200,000 units, down from its 2004 peak of 278,000 units.
Most of the firms at the top of the NMHC 50 managers list recorded significant portfolio gains. Dallas-based Riverstone Residential Group dominated the managers. The firm added nearly 64,000 units–a 70 percent increase in size, NMHC reports. The firm moved up two spots holding third place as the largest owner, just two years after the company was formed. Across the country, Seattle-based American Management Services (dba Pinnacle) added nearly 21,000 units, pushing it into the No. 2 manager spot.
This is the second straight year of significant increases in management concentration. As a sign of how much larger the top apartment management firms have become, the No. 50 firm on the NMHC 50 managers list would have been No. 36 as recently as five years ago. There is still considerable potential for future consolidation, as the NMHC 50 managers only control 15 percent of all U.S. apartments.
NMHC’s 50 rankings also documented the decreasing role of real estate investment trusts (REIT) in the sector. The number of apartment REITs in the NMHC 50 is down to 11 from a high of 14, the result of several private takeovers. The most noted of these was the Archstone-Smith buyout by Tishman Speyer and Lehman Brothers in 2007. According to NMHC, for the fourth year in a row apartment REITs as a whole were net sellers. They now own just 4 percent of the total U.S. apartment stock, the lowest figure since 1998, and down from a peak of 6.4 percent in 2003.
Author: Jamie McAfee of the Urban Land Institute.
