VOL. 126 | NO. 160 | Wednesday, August 17, 2011
MRG Bullish On Multifamily Market
By Sarah Baker
With pending uncertainty about the housing market, the local multifamily market appears to be staging a healthy comeback.
This year has been especially kind to Makowsky Ringel Greenberg LLC, a 45-year-old commercial real estate firm whose business model is about 80 percent multifamily work.
Through increases in occupancy, retention and rental rates, the Memphis-based firm is having landmark successes across the majority of its properties compared to both 2009 and 2010. And it doesn’t appear to be losing steam any time soon, said chief operating officer James Ringel.
“We foresee a paradigm shift in rental housing as a result of economic and demographic trends that will likely contribute to the growth in this industry for years to come,” Ringel said. “We are starting to see waiting lists, which we haven’t seen in years, and this naturally results in fewer concessions and, in some cases, increased rents in the first time in almost 10 years.”
MRG’s turnover rate is at 40 percent on a trailing 12-month basis across its entire 6,000-unit apartment portfolio – 17 percentage points lower than the national turnover rate recently reported by the National Apartment Association.
MRG properties built since the 1980s are in most cases exceeding 95 percent occupancy, and in some cases are between 98 to 100 percent.
That’s why MRG is bullish on specific new development opportunities. It’s in the final stages of leasing University Highlands, which at the time of purchase in August 2010 was totally unoccupied because of the property having been foreclosed upon.
MRG supervised the property’s renovation, which took about six months, as well as the lease-up. The property is currently 85 percent occupied and 100 percent leased. MRG manages University Highlands, along with four other properties, in the University of Memphis area under the umbrella name University Crossings.
Also benefiting MRG’s bottom line is an in-depth, formal training program it has in place for all its 180 employees. For eight years, it has implemented a program called “Leasing Idol” that rewards associates who attain the highest scores on quarterly mystery-shopping reports.
Coupled with a company named Who’s Calling, MRG uses an 800 number that appears in individual property advertising. The telephone tracking program helps determine the effectiveness of advertising campaigns and allows MRG to monitor phone techniques at the on-site level for training purposes.
On-site employees are expected to listen to calls each week and complete a self-evaluation. District managers listen to calls each week, both to provide immediate feedback and also to nominate a “Call of the Month” from their portfolio to be played at the company’s monthly managers’ meeting, at which a winner is selected to receive a prize.
“Engagement with and participation of employees is key and always has been,” Ringel said. “Using these programs consistently, regardless of market situation, has netted us not only award-winning agents as recently as 2011 for leasing excellence from the Apartment Association of Greater Memphis, but consistently at- or above-market occupancy and retention rates.”
Also contributing greatly to MRG’s success is its diversification. While it hasn’t been developing new properties for itself or investors as of late, its construction capabilities have been leveraged recently for third-party projects. It’s also seen commercial brokerage and management of smaller retail properties grow at a healthy clip over the past year.
As for the rest of 2011 and beyond, MRG plans to hold occupancy rates on more recently developed properties and improve occupancy in older developments, Ringel said. MRG is looking into current development opportunities at Schilling Farms in Collierville, as well as in the Arlington area.
“We believe that a variety of factors are converging to make new apartment development attractive,” Ringel said. “There are strategic opportunities available within the Memphis (Metropolitan Statistical Area). Nationally, institutional investors would likely consider Memphis a secondary to tertiary market based on things like household growth, population growth, household incomes, rental rates, etc. To us, Memphis is our primary market. It’s where the majority of our opportunities have been and likely will continue to be.”