Q&A: Edge’s Ryan Ogden on What Will Boost D.C.’s Multifamily Market and Warren Buffett’s Best Advice
Earlier this year, Edge hired multifamily veteran Ryan Ogden to head up the firm’s new Multifamily Capital Markets Group, based in its Washington, D.C., office.
Previously, he was senior managing director at NKF, founder of the ARA Mid-Atlantic office, and spent a dozen years with the Bozzuto Group, where he served as managing partner of acquisitions and asset management.
As a partner in Edge’s Multifamily Capital Markets Group, he is responsible for representing buyers of multifamily investment properties.
Commercial Observer spoke with Ogden about his first seven months on the job, how the pandemic changed his approach, and what the future of multifamily investment looks like in a post-COVID world.
Commercial Observer: As we enter fall, how would you define the current market for multifamily in the Washington, D.C., region?
Ryan Ogden: The long-term fundamentals for multifamily housing are better than they have ever been and the future is extremely bright. While the next 12 months could be somewhat rough, and likely will be for many investors across the country, I feel extremely confident that apartments will outperform the other sectors in real estate in a post-COVID environment.
How would you characterize it from an investment standpoint?
The current market—especially in the greater Washington, D.C., region—is strong and gaining momentum. Institutional buyers remain largely on the sidelines, which has created a tremendous opportunity for local and regional players to leverage this historically low interest rate environment to grow their portfolios, particularly 1031 exchange buyers.
A number of long-term owners have been disposing of older properties to an eager bunch of value-add investors and then reinvesting the proceeds into well-located Class A assets, without much competition from institutional buyers.
How does this year compare to historic numbers?
In terms of quantifiable numbers, transactional volume nationwide is down approximately 70 percent across all property types. The Washington, D.C., metro area is down a bit less than that, roughly 62 percent year to date, but D.C. is buffered by the presence of the federal government and typically does not suffer as much as most other markets in recessionary environments. For investors and owners that are using this time as an opportunity to buy newer and larger assets or grow their portfolio overall, this remains a once-in-a-lifetime opportunity for wealth creation.
What sort of impact did the pandemic have on the market overall?
From an operations standpoint, there has obviously been a great deal of uncertainty, including evictions, problems with collecting rent and issues related to the various stimulus packages. There was initially a great deal of hesitancy to move forward with trades, but that seems to have reversed course as investors have started to see light at the end of the tunnel.
What areas are strong, which are steady, and which are doing worse?
Most of our clients have expressed interest in core assets because of the stability and risk mitigation they provide. In a typical environment, the flight to quality from an ownership perspective is a much longer and more difficult path. The pandemic left a temporary void where the institutional buyers used to play. This factor and many others came together, which allowed buyers to leverage up into assets that are a step up from what they currently own, whether that’s a larger and more recently built asset, or one that is better located.
What factors and fundamentals make this region normally a strong multifamily market?
The greater Washington, D.C., region is inextricably tied to the federal government and its activities, and that typically makes this area a great apartment market due to the economic stability provided in this employment sector. Additionally, home prices in and around D.C. are among the highest in the country, so renting will always be the only option for many.
In your opinion, what can be done to overcome the challenges created by the pandemic to improve the market?
The best thing that can happen for the multifamily market, and for consumers of apartments, is for Congress to come together to provide emergency rental assistance for both the renters and the owners of multifamily communities. Millions of American families are struggling to make ends meet through no fault of their own. As a result, apartment owners are struggling too.
Any notable deals that have happened during the last few months?
Our multifamily practice is primarily focused on representing buyers and, more specifically, 1031 exchange buyers throughout the United States. We opened for business just before the COVID lockdown, so we really just got going this summer. We are currently representing a number of buyers with more than $500 million combined in 1031 funds that need to be placed into multifamily investments in various markets.
What are your expectations for the months ahead and early part of 2021?
The old adage ‘time heals all wounds’ rings true for Washington, D.C., and wounds are typically much shallower here due to the resiliency of the region’s economy. We’re extremely optimistic that the multifamily market will make a full recovery sooner rather than later. Debt and equity capital is readily available and needs to be deployed. Multifamily is still highly desired, and will be moving forward.
As a key leader in the industry, what is your strategy for the next year?
Because of how we have structured our business, our strategy won’t change regardless of fluctuations in the market. Our focus has been on the Mid-Atlantic this year but we are able to work for clients anywhere in the country, and that’s what we are planning to do. We’ve developed a proprietary predictive analytics platform that allows us to unearth potential transactions that might otherwise be missed. This helps us provide our clients with super-targeted, tax-efficient off-market opportunities to create wealth for them, their partners, and their investors.
Our team is confident that we will look back on this time as one where fortunes were made in real estate. COVID has created a fearful environment and, for many, rightfully so. It is timely to mention one of my favorite quotes from Warren Buffett, who proclaimed, ‘Be fearful when others are greedy. Be greedy when others are fearful.’ This was true coming out of the Great Recession and even more so coming out of COVID.