When Camden Property Trust (NYSE: CPT) went public two decades ago it had 20 properties in one state, today it has 192 properties in 20 states and has grown to become one of the largest multifamily REITs in the United States.
“I think the company grew and became what it is today because of our ability to adapt to the market,” said Ric Campo, chairman and CEO of the REIT since its IPO on July 22, 1993 and co-founder of the original company in 1982.
Being flexible to changing times, from a shareholder, landlord, and resident perspective, has been integral to the company’s success.
Campo said that in the early days after going public one analyst accused Camden of doing too much in the sector as the company was busy developing, acquiring and whatever else it could do to grow the business. However, Campo said that it’s that type of flexibility that has made the company thrive.
“We went public coming out of a recession and capital was limited for companies. This drove a massive wave of IPOs in and around 1993. Acquisitions were very easy and we were in a target rich environment,” he said. “It became so competitive that it then made more sense to develop than to acquire.”
Additionally, Campo said that Camden not only adapted to the business side of the multifamily business, but also adapted to being a public company. While there were a lot of companies that went public around the same time, Campo said many made the mistake of operating the same way as they did when they were a private company.
“The evolution of Camden also has a lot to do with being adaptable as a public company to create long-term shareholder confidence,” he said.
Meeting Tenant Expectations
Camden has had to keep up with the changing demands of tenants over the decades. What residents like to see in their apartment units or buildings today differ from their expectations of the past.
“Apartments today are more like homes and condos, with more high-end features on the inside,” said Campo.
In Camden South Capitol, one of Camden’s new communities that recently opened in Washington, D.C., the apartment homes come with floor-to-ceiling windows, stainless steel kitchen appliances and built in surround sound.
In the past, tenants looked primarily at affordability when it came to apartments. While still important today, Campo said consumers are more interested in the bells and whistles and apartment offers.
“So the actual size of apartments is starting to shrink. People need less space but want higher end features in the spaces that they get, “ he said.
One of the most significant shifts over the decades is that while residents are comfortable with smaller individual living spaces they want more building amenities and social spaces such as courtyard cafes and rooms to gather in, explained Campo.
“A lot of people want spaces to hang out with their friends or other residents. They are looking for little niches and great gathering spaces with Wi-Fi connections,” he said. “They are spending less time in their apartment and the social spaces are more robust today.”
As one of the early sectors to recover from the recent recession, Campo said that fundamentals continue to be strong in the multifamily space.
“We’re coming off of our best year in 20 years in terms of fundamentals and growth. We are at 9 percent NOI growth,” he said. “While fundamentals are moderating they are still very strong and very much above the average trend and have very high occupancy rates.”
When it comes to whether or not the single-family home recovery is impacting fundamentals, Campo explained that a housing recovery would ultimately help the multifamily market because it would most likely mean more jobs and an overall healthier economy.
“Overall, the single-family market has been so anemic it hasn’t really added to job growth,” he said. “Our average move-out rates for single-family homes was about 24 percent, then bottomed at 10 percent in the recession and we’re now at 12 or 13 percent.”
He said since the decision to move into an apartment is generally more demographic driven than anything else. Once more jobs return then that will create more people who will stop living with family or roommates and move into apartments, according to Campo.