Stockert isn’t alone in that sentiment. Almost every company on this year’s top 50 list expects its starts to fall further in 2009. And, in some cases, the decline will be drastic. Birmingham, Ala.–based Colonial Property Trust started 742 units in 2008. But in 2009, the REIT expects to start nothing. Trammell Crow Residential only expects to start 2,000 units—after nearly 11,000 units started two years ago.
“2009 is going to make 2008 look like a cake walk,” says Donald Phillips, owner and managing director of Phillips Development and Realty, a Tampa, Fla.–based builder that started 2,430 units in 2008, taking the No. 11 spot on the list.
To deal with the downturn, developers are making all sorts of changes. Many companies, such as JPI of Las Colinas, Texas, have been forced to downsize to stay afloat. The company sold its management services division to Charleston, S.C.–based Greystar Real Estate Partners and its JPI Resident Solutions team of multifamily technology advisors to RealPage, a Carrollton, Texas–based multifamily technology products and services provider.
Lane Co. jettisoned former CEO Bill Donges and brought back the company’s founder. Many others, such as San Francisco–based BRE Properties, announced sweeping layoffs. Colson and Colson in Salem, Ore.—traditionally a top 10 company—declined to participate in this year’s list and continues to remain mum about its financial health. Miami-based The Related Cos., the builder of flashy South Beach high-rises during the height of the boom, also chose not to participate this year.
Even firms such as Contravest, which is seemingly well situated with existing equity partners, have had to make tough choices. The company has laid off workers, cut salaries, reduced benefits, and consolidated office space. Development personnel who remain with the company have had their responsibilities shifted to other departments within the organization, such as property management, to keep them busy.
In Schaffer’s words: “Going forward, we’re [looking at] cash flow to try to make smart decisions today to keep as much cash on hand as possible to weather the next two years.”