The last big crisis in Real Estate was fifteen years ago. That crisis was caused by a malaise in the general economy and a lack of liquidity in the financial markets. Today we are suffering from the same problems. It’s like Déjà Vu all over again. Today’s apartment business is different and more resilient because there is more stability in the multifamily sector. The major players, mostly REITs, are backed by stable capital structures with a higher level of sophistication than existed fifteen years ago.

The last recession put many of the large syndicators that had been dominating the landscape out of business. Those syndicators were mostly replaced by the REIT. The sheer size of today’s REITs, combined with new technology has changed the way Multi-Family Real Estate is structured.

To help understand this change, consider the broad impacts of information technology. Technology has transformed the operating side of the business—yield management, resident screening, procurement, online apartment finders, maintenance scheduling, online rent payment and accounting are now managed online even by small investors who have made only a modest investment in a piece of land lording software.

These technologies were practically non-existent fifteen years ago, but today they have transformed the business. Now, systems that were once available only to the largest firms are quickly becoming an industry standard.

Technology alone is not what has made such a huge difference. The sophisticated operating platforms made possible by these technologies have allowed the redesign of core business processes. New operating platforms have changed the management structure in what was once a highly decentralized business.

The REIT structure of consolidated ownership has given unilateral control to what were previously fragmented portfolios suffering from a combination of third party management and different partners on different deals.

This change in structure encouraged the evolution of a unified business platform where the overall structure is controlled centrally and decisions are made based on what is in the best interest of a group of properties as well as the platform itself. Benefits of size, scale and centralization have followed this fundamental structural change.

The combination of a centralized operating structure and new technology has allowed corporate leaders to have information at their fingertips and the industry is now courting employees with the sophistication and training to use these systems and the information they provide to make key decisions.

The apartment industry is still in a recession and suffers along with everyone else, but it is in better shape than the other sectors of commercial real estate. The combination of new powerful platforms and positive demographic trends paints a positive picture several years out. In many ways the ‘90s are repeating themselves, but this time, the winners will end up with rock solid balance sheets and world class operating platforms.