Wednesday, October 20, 2010

Former HUD Secretary Cisneros: Five Factors Will Shape the Industry's Future

At the annual Multifamily Executive Conference held in Las Vegas last week, the closing keynote speaker was former U.S. Department of Housing and Urban Development Secretary Henry Cisneros.  He offered up his insights -- drawing heavily on his current experience as chairman of CityView, a Los Angeles-based developer of affordable housing currently raising money to acquire and redevelop multifamily housing in the Southwest, the Bay Area, D.C., and the Boston-New York corridor.

Among other things Cisneros said:
  1. Stick with apartments. They are a great investment. More than 70 percent of pension fund managers rank it as the highest return sector in real estate.
  2. Follow the institutions. For example, right now, many of the private funds he's talking to are looking to target student housing or university-adjacent housing.
  3. Demographics, particularly the Latino population, which will account for 50 percent of the population growth between now and 2030, will dictate different types of homes. Families, particularly those that are younger and larger, will outnumber the more nuclear, older families the industry is used to seeing.
  4. Energy efficiency is vital to acquisitive and development strategies today and must be approached as an necesssary investment.
  5. There is no better time to act than now. "For the past two years, we've heard that whoever would be standing at the end of the downturn would be well-positioned to move forward. That time has come. Builders: It's time to build. Buyers: It's time to buy. Investors: It's time to invest."
Cisneros ended his remarks by adding: "There's work out there to be done, and it's time for those who are able to move to take action. There will be great rewards for those first-movers."

Read more on the conference, where optimism abounded this year, online at Multifamily Executive.