Clay Grubb, CEO, Grubb Properties

In an interview with Invest:, Clay Grubb, CEO of Grubb Properties, emphasized the company’s success in retaining properties despite soaring interest rates and a housing affordability crisis. By focusing on essential housing, Grubb Properties is strategically addressing the housing shortage with efficient, sustainable designs. 

What have been some significant milestones or achievements for Grubb Properties?

Survival is the biggest milestone. We haven’t lost a single property in our 60+ year history, but it’s been incredibly challenging with the massive increase in interest rates. We have 12 development projects nationally that are currently on hold. Housing affordability is at its worst since 2007 and without new supply being able to start, it is going to make our affordable housing crisis much worse.

What lessons have you learned from the economic downturn in the past two years?

We’re fortunate that our company’s history has embraced compassion, a trait my father demonstrated with the families he sold homes to during our first two decades. When COVID hit, we embraced this approach, helping tenants struggling with rent, supporting team members with vaccine decisions, and addressing social issues like Black Lives Matter.

Our engagement scores have been phenomenal, thanks to this compassionate approach. We’ve had significantly less turnover compared to our competitors. Our seven-member C-suite team has been together for an average of 25 years, with the newest member at 16 years. This continuity has been crucial during challenging times. The first two words of our vision are “working together,” and we’ve truly lived up to that. It’s been a great strength to have a cohesive team with high levels of trust.

How does the company define and implement the concept of essential housing?

Essential housing is a modern term for apartments in our urban areas, similar to workforce housing in our suburban areas. This concept also evolved from the student housing boom over the last 20 years. Students enjoyed high-quality housing during college, and now, as they move into grad schools, hospitals, tech jobs, and service jobs, they want similar quality at prices they can afford.

There’s a massive shortage of essential housing. We didn’t coin the term, but we recognized during the pandemic that we were housing many essential workers. The median age range of our renters is 25-36, and their median income is $52,000 a year. Economic mobility is challenging at that salary level, so providing good housing with opportunities to reduce transportation and utility costs and offering conveniences that save time creates a valuable niche.

Municipalities are starting to embrace this concept. For example, a senator from Oregon is proposing a tax credit for this type of housing, and Colorado provides financing incentives. More and more communities are incentivizing this kind of housing, which is encouraging.

How is the company positioning itself to provide essential housing solutions in high-growth urban markets?

Efficiency is key for us. We build a limited number of floor plans, which I believe are the most efficient in the country. To quote Bruce Lee, “I fear not the person who has practiced 10,000 kicks once, but I fear the person who has practiced one kick 10,000 times.” We’ve been fine-tuning this concept for 20 years and exclusively building it for over a decade. This “rinse and repeat” approach lets us continually improve and evolve. We learn what people value and are willing to pay for, and what they don’t, making communities more efficient.

America is currently short over 4 million homes, facing one of the worst housing affordability crises in history. By focusing on essential housing, we’re addressing this critical need more effectively.

How are you adapting your strategies to meet the needs of millennials and Gen Z renters, especially in terms of affordability and amenities?

The top amenity these renters seek is the ability to not use their car. We recently discussed this in a webinar about the bus rapid transit from Matthews to downtown Charlotte. Implementing faster and more cost-effective transit solutions can significantly impact our median earners. The average American spends over $10,000 a year on their car, and for someone making $52,000 annually, not owning a car can bring them substantial savings.

Besides transportation, millennials and Gen Z want walkable amenities like brewpubs, bike trails, and greenways. For instance, the Sugar Creek Greenway in Charlotte is a tremendous asset, and making it more accessible from our Link Apartments in Montford would be a significant amenity. Being outdoors and close to nature is highly valued, as is sustainability.

Sustainability is crucial for this generation because they will deal with the long-term effects. We recently met with an investor who uses a climate filter for all real estate investments, ensuring properties can withstand a 10-foot sea level rise by 2050. It’s the most stringent standard I’ve encountered and highlights the significant challenges ahead, especially concerning the heat index and climate impacts.

How are you incorporating sustainability into your long-term investment strategy?

My goal is that by 2030, every new project we start will be net-zero carbon. While retrofitting existing properties is challenging, advancing technology allows us to make more effective investments in sustainability. Every Link Apartments community we build meets green certification standards, with most new ones achieving silver level. We’ve been investing in energy efficiency since 1994, and these investments have paid off tremendously. We plan to continue this approach.

How are you integrating digital tools and smart technologies into your properties?

Many young renters prefer not to talk to anyone face-to-face, relying on AI and the web to make living decisions. They sign leases and move in without directly interacting with our team but still expect personal service, which I call Southern old-fashioned charm. We’re using AI to free up our team members so they can focus on personal touches like holding resident events, helping with move-ins, and explaining local amenities. This doesn’t reduce our staff but allows them to offer more personal services.

How do you engage with local communities to ensure your developments meet their needs?

We started as a home builder in redlined neighborhoods, providing services and home ownership opportunities to primarily Black communities. This background often helps us because we’re not building super-premium luxury products but essential housing that teachers and city employees need.

We spend a lot of time meeting with local folks to understand their needs. Many of our managers and team members live locally, often at our properties, and we strongly support local businesses. For example, in May 2020 during the heart of the pandemic, if tenants paid their rent on time, 2% of their rent went to a crisis nonprofit in the immediate neighborhood.

Additionally, we build a Habitat for Humanity house every year in one of the communities we’re involved in. We also give each of our team members 48 hours of paid time off a year to support volunteer efforts, whether supporting our initiative or something of their own choosing. We’re proud of our team’s commitment to local initiatives, ensuring our efforts are community-driven rather than nationally dictated.

What are the top priorities and goals for Grubb Properties over the next two to three years?

Beyond survival, our goal is to deepen our presence in the communities where we’re already located, including Charlotte, rather than expanding into new markets. Our footprint includes areas from Atlanta to New York City on the East Coast, as well as Tennessee, Colorado, and California. These markets offer diverse economic opportunities sufficient for our growth.

Currently, New York City is probably the best housing market in the country from a multifamily owner standpoint, while Atlanta is potentially the worst. This allows us to navigate both extremes and find ways to succeed. For example, we haven’t expanded in Atlanta in over five years but have aggressively expanded in New York. This dynamic will likely reverse at some point.

California, with its high barriers to entry, is now one of the most pro-housing development states, reversing 50 years of restrictive policies. Outside San Francisco, it doesn’t experience the booms and busts seen in other markets. We’re focusing on these opportunities to continue growing and serving our communities effectively.