While some retail and office markets experience double-digit vacancies as the technology boom screeches to a halt, the apartment industry remains relatively stable with a steady 6% vacancy rate, according to a report by Palo Alto, Calif.-based Marcus & Millichap. In the past 12 months, apartment purchases have increased 5%.

“The industry has been very disciplined over the last five to six years and has not overbuilt markets,” said Mark Obrinsky, chief economist for the National Multi Housing Council (NMHC). “Whenever there's been a hint of overbuilding, construction slowed very quickly,” he said. Citing maturity in the multifamily industry, Obrinsky added that a slower economy actually may allow construction to catch up with demand.

In the following two surveys, the NMHC ranks the top 50 apartment owners and the top 50 apartment managers.

The big get bigger

In one of the big stories of the year, Archstone Communities (11th on the 2001 ownership list), Englewood, Colo., and Charles E. Smith Residential Realty (33rd on the 2001 ownership list), Arlington, Va., reached a merger agreement on May 4. The transaction is expected to close in September, and was unanimously approved by the boards of both companies. The merged company, which will operate as Archstone-Smith Trust, will own 87,456 units.

Douglas Crocker, CEO of Chicago-based Equity Residential Properties Trust, which placed No. 2 on both Top 50 lists, pointed out that the health of the industry varies from market to market. “Some markets remain healthy, while some are deteriorating,” Crocker said.

Rents in San Francisco and Atlanta will decrease this year because of overbuilding, while San Diego and Boston are boasting strong unit absorption and rent growth. According to Marcus & Millichap, apartment development in San Francisco will drop by 15.3% this year to a total of 2,100 completed units. “Based on the fact that you have a weakening economy that could fall into a recession, you've got an industry that's doing very well on a comparative basis,” Crocker said.

Stan Harrelson, CEO of Seattle-based Pinnacle Realty Management Co., emphasized that consistent growth keeps Pinnacle ahead of competitors. “In the last year we've grown 10%, and that is what we project for this year as well,” Harrelson said. Pinnacle Realty ranked No. 3 on the Top 50 management list, gaining one spot from last year. The company owns properties in 45 states and western Canada, with 29 regional and branch offices. Its strategy leans toward the maturation of existing properties rather than acquisitions.

Richard Burns, principal and head of conventional multifamily investment business for Lend Lease Real Estate Investments Inc., based in Atlanta and New York, said that quality management provides a means to beat competitors. “We have very intensive training and coordination procedures that focus on the fact that this is where people live,” Burns said. “This is their home and community.”

Lend Lease Real Estate Investments retained its No. 4 spot on this year's owner's list. Lend Lease bought almost $700 million in property in fiscal year 2000.

Trends

Property insurance and utility increases are some of the most significant concerns in the industry. These issues stem from economic problems and may force apartment owners to hike rent prices. Harrelson predicts the near future will be a “rough time” for property insurance because of losses in the past and lower returns.

Insurance in Florida, for example, has skyrocketed from an average of $120 per unit to more than $300 per unit. The cost of utilities also is increasing because of energy shortages in worldwide markets. Untimely deregulation in California has exacerbated the problem on the West Coast instead of ultimately lowering prices.

Burns said he thinks that the upper end of the multifamily market is starting to soften with the economy, and industry professionals should realize that the multifamily industry will eventually be affected by it. “One thing I've learned in my career is that trees do not grow to the sky,” Burns said.

However, the discipline imposed by the public markets has prepared the industry for an economic downturn, according to Burns. For example, banks and construction lenders have balanced supply and demand with tightened lending standards.

Banks often require the developer to put up 30% equity or more in an effort to avoid the problems caused by the last downturn. “We haven't seen the kind of overbuilding that we've seen in other cycles,” Burns said.

Despite the sinking economy, top multifamily companies are optimistic that their industry will continue its steady growth.

“I think the residential multifamily companies will do significantly better than Corporate America this time around if there is a recession,” Crocker said. “Most of our markets are in balance, but there's not excess inventory being built. We should all produce reasonable profits and many of us should continue to produce earnings growth, which is an anomaly in a recession.”

2001 OWNERSHIP

NATIONAL MULTI HOUSING COUNCIL 50
(50 Largest U.S. Apartment Owners as of January 1, 2001)
2001 RANK 2000 RANK COMPANY HEADQUARTERS CEO 2001 APARTMENTS WITH OWNERSHIP INTEREST 2000 APARTMENTS WITH OWNERSHIP INTEREST
1 1 APARTMENT INVESTMENT AND MANAGEMENT COMPANY Denver, CO Terry Considine 265,620 240,540
2 2 EQUITY RESIDENTIAL PROPERTIES TRUST Chicago, IL Douglas Crocker, II 225,466 228,504
3 3 RELATED CAPITAL COMPANY New York, NY Stuart J. Boesky 160,860 148,080
4 4 LEND LEASE REAL ESTATE INVESTMENTS, INC. Atlanta, GA Fred. N. Pratt Jr. 126,357 113,744
5 6 BOSTON CAPITAL Boston, MA John P. Manning 106,000 102,564
6 8 SUNAMERICA AFFORDABLE HOUSING PARTNERS, INC. Los Angeles, CA Michael L. Fowler 95,000 81,000
7 5 WHITEHALL FUNDS New York, NY Daniel Neidich 84,000 105,000
8 7 UNITED DOMINION REALTY TRUST, INC. Richmond, VA Thomas W. Toomey 79,065 81,180
9 10 CASDEN PROPERTIES INC. (NATIONAL PARTNERSHIP INVESTMENTS CORP.) Beverly Hills, CA Alan I. Casden 71,826 66,991
10 11 LEFRAK ORGANIZATION INC. Rego Park, NY Samuel J. LeFrak 69,000 66,000
11 9 ARCHSTONE COMMUNITIES Englewood, CO R. Scot Sellers 63,443 70,697
12 12 SENTINEL REAL ESTATE CORPORATION New York, NY John H. Streicker 62,549 59,000
13 17 GE CAPITAL REAL ESTATE Stamford, CT Michael Pralle 52,500 39,137
14 13 CAMDEN PROPERTY TRUST Houston, TX Richard J. Campo 51,336 55,260
15 15 HOME PROPERTIES Rochester, NY Norman Leenhouts/Nelson Leenhouts 47,497 41,517
16 14 EDWARD ROSE BUILDING ENTERPRISES Farmington Hills, MI Sheldon Rose 46,959 45,589
17 24 ALLIANCE HOLDINGS, L.L.C. Chicago, IL Andrew W. Schor 45,652 34,867
18 16 LINCOLN PROPERTY COMPANY Dallas, TX Mack Pogue 44,702 41,334
19 18 WALDEN Addison, TX John B. Bartling 43,541 39,024
20 23 RICHMAN GROUP CAPITAL CORPORATION Greenwich, CT Richard P. Richman 38,272 35,723
21 19 AVALONBAY COMMUNITIES, INC. Alexandria, VA Bryce Blair 37,146 37,885
22 21 MILSTEIN PROPERTIES New York, NY Howard P. Milstein 37,000 37,000
23 FIRST UNION CORPORATION Charlotte, NC Ken Thompson 36,333 N/A
24 27 FOREST CITY RESIDENTIAL GROUP, INC. Cleveland, OH Ronald A. Ratner 35,913 33,804
25 25 MID-AMERICA APARTMENT COMMUNITIES, INC. Memphis, TN George E. Cates 33,632 34,540
26 20 CRI, INC. Rockville, MD William B. Dockser 33,004 37,612
27 37 COLUMBIA HOUSING Portland, OR David Sebastian 31,166 24,853
28 31 UBS REALTY INVESTORS LLC Hartford, CT James W. O'Keefe, Jr. 30,623 28,848
29 30 POST PROPERTIES, INC. Atlanta, GA John A. Williams 30,247 30,646
30 33 CHARLES E. SMITH RESIDENTIAL REALTY Arlington, VA Ernest A. Gerardi, Jr. 29,696 27,634
31 32 COLSON & COLSON/HOLIDAY RETIREMENT CORP. Salem, OR William E. Colson 29,668 27,834
32 39 PRUDENTIAL REAL ESTATE INVESTORS Parsippany, NJ Bernard Winograd 28,413 24,600
33 36 WNC & ASSOCIATES, INC. Costa Mesa, CA Wilfred N. Cooper, Sr. 26,733 25,002
34 40 NORTHWESTERN MUTUAL Milwaukee, WI James Ericson 26,161 24,100
35 46 AMLI RESIDENTIAL PROPERTIES TRUST Chicago, IL Allan J. Sweet 26,147 22,315
36 KUSHNER COMPANIES Florham Park, NJ Charles Kushner 25,000 N/A
37 28 SECURITY PROPERTIES, INC. Seattle, WA John M. Orehek 24,853 30,998
38 35 GABLES RESIDENTIAL TRUST Atlanta, GA Chris D. Wheeler 24,774 27,352
39 44 TRAMMELL CROW RESIDENTIAL Atlanta, GA J. Ronald Terwilliger 24,503 22,588
40 34 BASIC CAPITAL MANAGEMENT, INC. Dallas, TX Gene Phillips 24,049 27,594
41 42 BERKSHIRE REALTY HOLDINGS, L.P. Atlanta, GA Douglas Krupp 23,812 23,833
42 43 RAYMOND JAMES TAX CREDIT FUNDS, INC. St. Petersburg, FL Ronald Diner 23,314 23,124
43 38 BRE PROPERTIES, INC. San Francisco, CA Frank C. McDowell 23,253 24,800
44 41 TVO REALTY PARTNERS Chicago, IL Wayne A. Vandenburg 23,250 23,917
45 BH MANAGEMENT SERVICES, INC. Dallas, TX Laurie Lyons 22,786 12,000
46 45 SOUTHERN MANAGEMENT CORPORATION Vienna, VA David H. Hillman 22,477 22,476
47 CONAM MANAGEMENT CORP. San Diego, CA Daniel J. Epstein 22,000 19,500
48 ALTERRA HEALTHCARE CORPORATION Milwaukee, WI Robert Haveman 21,845 19,534
49 26 JPI Irving, TX J. Frank Miller, III 21,700 33,883
50 WESTDALE ASSET MANAGEMENT, LTD. Dallas, TX Joseph G. Beard 20,956 N/A


2001 OWNERSHIP

NATIONAL MULTI HOUSING COUNCIL 50
(50 Largest U.S. Apartment Owners as of January 1, 2001)
2001 RANK 2000 RANK COMPANY HEADQUARTERS CEO 2001 APARTMENTS MANAGED 2000 APARTMENTS MANAGED
1 1 APARTMENT INVESTMENT AND MANAGEMENT COMPANY Denver, CO Terry Considine 325,094 362,468
2 2 EQUITY RESIDENTIAL PROPERTIES TRUST Chicago, IL Douglas Crocker, II 233,250 234,756
3 4 PINNACLE REALTY MANAGEMENT COMPANY Seattle, WA Stan J. Harrelson 108,356 98,656
4 3 LINCOLN PROPERTY COMPANY Dallas, TX Mack Pogue 100,371 100,946
5 5 UNITED DOMINION REALTY TRUST, INC. Richmond, VA Thomas W. Toomey 75,165 81,180
6 6 ARCHSTONE COMMUNITIES Englewood, CO R. Scot Sellers 63,443 67,208
7 7 SENTINEL REAL ESTATE CORPORATION New York, NY John H. Streicker 62,549 59,000
8 9 TRAMMELL CROW RESIDENTIAL Atlanta, GA J. Ronald Terwilliger 60,324 48,799
9 8 CAMDEN PROPERTY TRUST Houston, TX Richard J. Campo 51,828 56,060
10 11 HOME PROPERTIES Rochester, NY Norman Leenhouts/Nelson Leenhouts 50,500 45,475
11 10 CONAM MANAGEMENT CORPORATION San Diego, CA Daniel J. Epstein 47,500 46,500
12 12 POST PROPERTIES, INC. Atlanta, GA John A. Williams 46,896 44,194
13 23 ALLIANCE HOLDINGS, L.L.C. Chicago, IL Andrew W. Schor 45,652 34,867
14 13 EDWARD ROSE BUILDING ENTERPRISES Farmington Hills, MI Sheldon Rose 44,701 43,331
15 36 WHITEHALL FUNDS New York, NY Daniel Neidich 44,000 25,000
16 14 WALDEN Addison, TX John B. Bartling 43,541 43,269
17 21 WESTERN NATIONAL PROPERTY MANAGEMENT Irvine, CA Michael K. Hayde 42,005 36,465
18 15 GABLES RESIDENTIAL TRUST Atlanta, GA Chris D. Wheeler 41,325 41,272
19 22 LEFRAK ORGANIZATION INC. Rego Park, NY Samuel J. LeFrak 38,657 35,657
20 16 AVALONBAY COMMUNITIES, INC. Alexandria, VA Bryce Blair 37,779 38,518
21 25 GREYSTAR Houston, TX Robert A. Faith 37,663 34,170
22 17 MILSTEIN PROPERTIES New York, NY Howard P. Milstein 37,000 37,000
23 WESTDALE ASSET MANAGEMENT, LTD. Dallas, TX Joseph G. Beard 36,725 N/A
24 24 MID-AMERICA APARTMENT COMMUNITIES, INC. Memphis, TN George E. Cates 33,632 34,540
25 27 LANE COMPANY Atlanta, GA Gail Armstrong 33,615 32,726
26 ASSOCIATED ESTATES REALTY CORP. Richmond Heights, OH Jeffrey I. Friedman 32, 124 N/A
27 32 COLSON & COLSON/HOLIDAY RETIREMENT CORP. Salem, OR William E. Colson 31,428 28,259
28 30 CHARLES E. SMITH RESIDENTIAL REALTY Arlington, VA Ernest A. Gerardi, Jr. 31,134 29,028
29 29 BERKSHIRE REALTY HOLDINGS, L.P. Atlanta, GA Douglas Krupp 30,327 30,756
30 31 VILLAGE GREEN COMPANIES Farmington Hills, MI Jonathan Holtzman 28,000 28,500
31 35 LEDIC MANAGEMENT GROUP Memphis, TN David L. Shores 27,797 26,404
32 39 AMLI RESIDENTIAL PROPERTIES TRUST Chicago, IL Allan J. Sweet 27,358 23,160
33 18 JPI Irving, TX J. Frank Miller, III 27,000 36,546
34 42 FOREST CITY RESIDENTIAL GROUP, INC. Cleveland, OH Ronald A. Ratner 25,319 21,849
35 50 MARRIOTT SENIOR LIVING SERVICES Washington, DC Jeffrey Ferguson 24,902 19,465
36 38 CASDEN PROPERTIES INC. (NATIONAL PARTNERSHIP INVESTMENTS CORP.) Beverly Hills, CA Alan I. Casden 24,169 23,650
37 34 BASIC CAPITAL MANAGEMENT, INC. Dallas, TX Gene Phillips 24,049 27,594
38 33 SIMPSON HOUSING LIMITED PARTNERSHIP Denver, CO J. Robert Love 23,645 27,748
39 37 EPT MANAGEMENT COMPANY El Paso, TX Russell A. Vandenburg 23,299 23,893
40 20 BRE PROPERTIES, INC. San Francisco, CA Frank C. McDowell 23,253 36,500
41 19 LEND LEASE REAL ESTATE INVESTMENTS, INC. Atlanta, GA Sheryl Pressler 22,800 36,538
42 47 BH MANAGEMENT SERVICES, INC. Dallas, TX Laurie Lyons 22,786 20,000
43 FPI MANAGEMENT INC. Sacramento, CA Dennis Treadaway 22,512 17,882
44 40 SOUTHERN MANAGEMENT CORPORATION Vienna, VA David H. Hillman 22,477 22,476
45 GRENADIER REALTY CORP. Brooklyn, NY Felice L. Michetti 22,153 18,354
46 KUSHNER COMPANIES Florham Park, NJ Charles Kushner 22,000 N/A
47 ALTERRA HEALTHCARE CORPORATION Milwaukee, WI Robert Haveman 21,845 N/A
48 44 DRUCKER & FALK LLC Newport News, VA John A. Munick, Jr. 21,019 20,738
49 46 SUMMIT PROPERTIES INC. Charlotte, NC William F. Paulsen 20,698 20,373
50 45 JMG REALTY, INC. Atlanta, GA T. Karlton Jackson 20,519 20,519