MRE Investment Climate in 2020: An Interview with Mark Caplan
A Q&A with Mark Caplan, Chairman of WPM Real Estate Management and President/CEO of Time Group Real Estate Investment
We recently sat down with WPM Chairman Mark Caplan in his role as managing partner of the firm’s largest client to get his perspective on the climate for multifamily real estate in 2020
WPM: How would you describe the multifamily real estate investment market for 2020?
Caplan: From an investor perspective, the multifamily real estate market is generally going well, is very local in nature and increasingly competitive. Existing communities are performing well and investment opportunities with the right economic return are harder to find. I think multifamily real estate investment is being pursued aggressively in the region, driving down capitalization rates and expected returns. Plus, the market may be a little over supplied. There’s been a lot of new building and that simply takes a while to be absorbed.
WPM: How would you say the Mid-Atlantic and MidSouth regions compare to the national market?
Caplan: I would say these markets are performing similarly or even a bit better than the national market because of growth. We’re a coastal country with the East and West coasts shouldering much of the activity and economic growth in our country.
WPM: What current trends are you seeing in multi-family real estate?
Caplan: I believe we’re seeing less movement to home ownership in this next generation. Increasingly, we’re seeing millennials continuing to rent versus buy. I think this will lead to greater diversity in terms of property types, including more suburban and single-family home rentals. As millennials who would typically have been housed in urban apartments begin to have families and move out to the counties, we see their desire to rent continuing. Additionally, some of the amenities that up until now have typically been in urban settings may need to be thought about for suburban communities – things like package delivery, fitness centers, and business centers. Furthermore, I think transportation is key. How we’re thinking about transportation, including services like Lyft, Uber and Zip Cars, impacts where people want to be located and how people choose their communities.
WPM: What do you think will be the biggest opportunities this year for real estate investment?
Caplan: I think one of the biggest opportunities for real estate investment is on the office and retail side. It’s not my focus, but I believe someone with the right vision – who understands and can anticipate the way industry is changing and how that will affect how people will work or shop in the future – has a big opportunity. Investors may have different views based on their perspective about changes in technology, industry, home delivery models, etc. It’s a chance to be really right about what’s needed or to be really wrong. Who knows?
WPM: What challenges do you think the market faces?
Caplan: I would have to say affordability and supply. There’s a lot coming online right now, and the question is how you pay for it. It’s why I think it is so important for companies like WPM Real Estate Management to focus on being both customer centric and efficient in managing expenses.
Residents who are happy will stay longer. WPM places significant emphasis on providing residents with a good home and superior service at a fair price. It’s why the firm continues to maintain high occupancy levels and continues to receive some of the top ratings for customer satisfaction in the industry.
Ensuring operational efficiencies is another critical factor for properties and owners, especially when faced with challenges of an over-supplied market. It’s important that your management company understands the owner’s perspective and is making good decisions that ensure both quality and cost-control when turning apartments, handling repairs and maintenance, and servicing equipment for operability.
WPM: What’s next for your team in 2020?
Caplan: We continue to look for greater geographic diversity and expansion into mid-tier cities within the region, where we can bring our investment expertise and our management experience, size and scale to bear. We have recently invested in the York, Pa., Richmond, Va., and Wilmington, De., and continue to look for opportunities within these and other similar regional markets.
I think what makes us different than other investor groups entering these markets is our commitment to becoming a part of the communities we serve. We’ve been very intentional and selective about where we want to grow. Our interests are in long-term relationships where our work is integral to the greater community – much like what we’ve done in the Baltimore market. We bring significant development expertise as well as a deep reservoir of equity to make projects happen. And, we bring with us a talented property management company that has a proven-track record of success. I’m excited about the strength of this combination and look forward to seeing what lies ahead in 2020.
Mark Caplan is Chairman of WPM Real Estate Management and serves as President and CEO of The Time Group, an investment real estate firm. He is a founding member of the Real Estate Advisory Board at the Columbia Business School and has been a guest lecturer on real estate topics at the Columbia Business School, Wharton Business School, the University of Maryland School of Law and the Carey School of Business. He has served on the Board of Trustees at Saint Ignatius Loyola Academy, the Bryn Mawr School, Walters Art Museum, Gilman School, Center Stage, Baltimore Educational Scholarship Trust, Bay Bank, FSB as well as the Charles Street Development Corporation.