Cushman & Wakefield, which two years ago greatly expanded its apartment property management business with the acquisition of a national firm, aims to leverage that larger footprint to expand its multifamily operations business even as it confronts rising costs.
That's the word from Rick Graf, the Dallas-based president of U.S. multifamily asset services at Cushman & Wakefield. Graf joined Cushman & Wakefield in March 2020 when the firm completed its acquisition of Pinnacle Property Management Services, where he had served as president and CEO.
"We've grown significantly," Graf said during an interview at the National Apartment Association's recent Apartmentalize conference in San Diego. Many of Pinnacle's "multifamily clients, particularly institutional clients, were clients of the firm on the commercial side. So there's a natural synergy and the opportunity to partner with our colleagues in the investment sales side of the business."
Late last year, Cushman & Wakefield paid $500 million for a 40% stake in New York City-based Greystone's multifamily agency lending and servicing and Federal Housing Administration lines of business. Chicago-based Cushman & Wakefield's investment in Greystone provides an additional opportunity to expand its multifamily asset and property management services group, Graf said.
"So between investment sales, asset services, property management and the lending piece, there's a lot of synergies that we're putting together to really offer a better, deeper relationship with our clients," he said.
Also, the pandemic opened the eyes of many investors to the importance of property management and the workers who played a key role in keeping apartment complexes operational during shutdowns designed to slow the spread of the virus, Graf said.
"Clearly I’ve always thought property management was a really important part of the whole investment thesis, but I think our clients have realized the importance of the operational teams, particularly at the site level," he said. "They didn’t stop working. Our maintenance men and women, our staffs, they were at the properties. They were going into people's homes. They were making things happen, to keep things going at the property level."
However, Cushman & Wakefield, like other providers of management services to the multifamily industry, must confront inflation, which hit a 40-year high of 8.6% in May. The overall effect of rising prices on property management is yet to be determined, but it is being felt, he said.
"We’ve had incredible pressure on wages, particularly at site-level maintenance positions, leasing positions, as you would expect," Graf said. "And staffing shortages, which is not exactly because of inflation, but it’s ... a byproduct, and then just the ability to source the products that we use to manage and maintain our properties. We’re seeing those costs go up."
High inflation should be around for a while, he said.
"I don’t think that’s going to ease in the short term," Graf said. "I think long term it will, but we’ve certainly seen our costs go up significantly."