Multifamily Industry Rises to Challenges with Optimism

NAA president and CEO Doug Culkin speaks at the annual conference in San Francisco.

SAN FRANCISCO—The National Apartment Association (NAA) held its annual Education Conference and Expo in San Francisco last month, and its president and CEO Doug Culkin recently shared his views on the apartment industry which houses around 100 million residents across the country, in this exclusive . GlobeSt.com: Please provide an overview of the apartment industry and what’s in store for the future. Doug Culkin: The industry went through changes after the subprime meltdown. Sadly, people lost homes but we welcome them in. Now, there is a boom for apartments with a 96 to 97% occupancy rate, while homeownership rates are down since 2008. The appeal of apartments is the flexibility they provide due to transfers and other life changes; there are no home selling hassles involved. Both millennials and baby boomers are attracted to renting because of its affordability and no maintenance. In fact, 150 million people in both groups are considering apartments for those reasons. GlobeSt.com: What are the key challenges affecting the apartment industry? Culkin: Legislative and building regs, opposition to building, including construction costs and fees are a few of the challenges. The fee per door fluctuates across the country but the average in San Francisco/Berkeley is $198,000 per door. GlobeSt.com: What is the industry’s response to homelessness? Culkin: One idea is to use vacant apartments to house those who are temporarily homeless. This is currently being done in Florida. Another program that is working well is HUD-Veterans Affairs Supportive Housing (HUD-VASH). It combines voucher rental assistance for homeless veterans with case management and clinical services provided by the Department of Veterans Affairs (VA). The VA provides these services for participating veterans at VA medical centers and community-based outreach clinics. The multifamily industry would be happy to work with the government on other similar programs to transition the chronic homeless into housing, when combined with training and jobs. GlobeSt.com: What is the industry’s response to affordable/workforce housing? Culkin: Workforce housing is very important for teachers, firefighters, etc. The combination of the cost of land, construction, labor and fees means that rents must be high enough to cover those costs. If there was cooperation with cities to share costs, that would be helpful to allow pricing the workforce could afford.  GlobeSt.com: What effects are technology/disruptive businesses (Airbnb) having on the apartment industry? Culkin: We’ve had a number of discussions with them (Airbnb). If we can work together on temporary renter screening for not only the safety but the liability of residents, both sides would benefit. We have a responsibility to residents but we continue to engage with Airbnb. GlobeSt.com: What makes the San Francisco apartment market unique? Culkin: It is such a strong draw; an incredible, appealing market. Rents and demand are both up, which indicates a healthy market. The technology industry makes it attractive for young people and venture capital. They want to be in San Francisco/San Jose. California in general has the largest concentration of apartment owners. NAA provides its members with a range of strategic, educational, operational, networking and advocacy resources they need to learn, to lead and to succeed. As a federation of nearly 170 state and local affiliates, NAA encompasses more than 69,000 members representing more than 8.1 million apartment homes throughout the United States and Canada.