Multifamily French Fries (A Fragmented Marketplace)

by John Wilhoit Jr. on

Multifamily assets are like French fries; everyone thinks theirs are the best.  But with so many to choose from how do you know?  The multifamily marketplace is a fragmented industry.  No one entity or person owns a controlling interest.   

Everyone has a opinion about who makes the best French fries.  But McDonald’s buys more potatoes and sells more french fries than anyone.  However, knowing who makes and sells the most French fries (or beer, or boots) has not deterred hundreds of new eateries (or breweries, or cobblers)  in the last few years either.  And there is always room for one more. 

Biggest is represented by a single number.  Best in class is more subjective.  Multifamily is a fragmented industry as the biggest firms in the industry control less than one percent of assets.

The 50 biggest multifamily owners in the United States own and control approximately 2,700,000 housing units.   That’s a big number.  However, it represents only two percent (2%) of the total housing market.  That’s right- just two percent. 

Who owns the most multifamily units in the United States?  As of 2011 it’s Boston Capital with 158,000 units.  In second place is Centerline Capital Group with 152,000 units.  These are big, well capitalized companies.  Yet if these two companies doubled in size tomorrow they would not own one tenth of one percent of the housing market.

We’ve all  met people that own a single rental house or duplex that can talk for an hour about their view on property management.  Hey, they are part of the industry too. They represent the hot dog stand that turns into a pop up restaurant that turns into a corner shop that turns into a chain.   

And who knows, five years from now this person may own ten or twenty rentals.  They are part of our fragmented industry.  Want to know where the next Centerline Capital comes from? There’s a good chance the founder will be the hardest working property manager you know right now.   

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Multifamily Insight is dedicated to assisting current and future multifamily property owners, operators and investors in executing specific tasks that allow multifamily assets to operate at their highest level of efficiency. We discuss real world issues in multifamily property management and acquisitions. This blog is intended to be informational only and does not provide legal, financial or accounting advice. Seek professional counsel.  For more information, visit: http://www.MultifamilyInsight.com

 

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{ 1 comment… read it below or add one }

Jill May 14, 2012 at 6:43 pm

Wow I can’t think of any other industry where the biggest marketshare makes up just 2% of the total… WOW

Thank you For Posting.

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