Spring 2008 Executive Summary - Part I

We get asked all of the time for updated information regarding the multi-family housing industry not only for Tampa Bay, but for Florida and the nation as a whole. That request was a major driving force behind creating this blog. We honestly feel that knowledge is power and so the more information that is out there about and concerning our industry the better. Through all of the opinion, data, editorials, statistics, and news we hope that we can be a part of this discussion and thus help the industry move forward.

Part of that belief was born a year ago with the release of our first ever Executive Summary. This Summary gave a snapshot of the economic trends for apartment communities in Tampa Bay. Two months ago in January, we released our third Summary which we hoped would provide a snapshot of economic conditions both current and past, current and future development, and innovations in features and amenities. The response was so overwhelming that we are again releasing that Summary via this blog. In no particular order, the report will be released in parts over the next few days.

Today is Part I, a look back at 2007, how 2008 is shaping up to look, and what you can expect to see from the report in the next few days. Enjoy!

In my experience, in the real-estate business, past success stories are generally not applicable to new situations. We must continually reinvent ourselves, responding to changing times with innovative new business models.
-Akira Mori, President and Chief Executive of the Mori Trust

Overview
Innovative new business models may just be what is needed for 2008 and beyond. With the uncertainty and upheaval of the past two and a half years the industry continues its movement into an equally uncertain new year. It seems that at this point, the multi-family industry may have no choice but to be open to new ideas. As billionaire Akira Mori suggests in the quote preceding this article, the real estate sector cannot rely on past successes when responding to new challenges.

To understand where the industry is headed we need to briefly review a short history. In 2005 and early 2006 the condominium market soared, with excited buyers and investors creating an 18-24 month window of success for the real estate market. This includes the sales of apartments as condos after a ‘condo conversion’. It was classic supply and demand.

In mid to late 2006 however, the condo bubble burst, flooding the market back with available units. Supply suddenly outweighed demand. In addition, there was no sudden influx of new renters, and those available units became re-categorized as rental units---primarily all unoccupied. Even more prominent in 2007 was the buckling of the housing market, while simultaneously, the multi-family industry saw condo units and single family homes seep into the rental world. This economic decline in real estate began to filter throughout scores of industries, casting an ominous foreshadowing on things to come.

2007 saw the market scales tip heavily in favor of available supply, in single-family housing, condos and apartment units. 2008 then should see industry professionals creating new ideas that differentiate the apartment industry, and allow it to reclaim its prominence as the choice for renters.