Spotlight On: Ric Campo, Chairman of the Board & Chief Executive Officer, Camden Property Trust
August 2024 — The next two years in the real estate market are going to see some changes as the business cycle rationalizes. “The Houston market is doing reasonably well on a relative basis to the rest of the market,” Ric Campo, chairman of the board and CEO of real estate investment company Camden Property Trust, told Invest:.
How would you describe Camden?
Camden is a great Houston success story. It is a great example of Houston’s opportunity, the ability for companies to grow, and for entrepreneurs to do well. It’s the most diverse city in America, and it’s the most welcoming city in America. If you go back to the start of Camden, it was a startup in Houston. We founded our business with no capital and got Houstonians to believe in housing, and we started buying apartments and building apartments. It started with nothing, and now it’s a $15 billion publicly traded company in the S&P 500. It all started in Houston with Houston capital.
Why is Houston a great place for Camden?
Our headquarters is in Houston. It’s really important to get the best and the brightest minds working together toward a common goal and to create long-term value for each other. They’re educated, smart, and diverse. That’s the key. When you think about a company like Camden, It’s all about people. Houston is a great place to be headquartered because we get the best and the brightest here in Houston.
Our properties are our equipment, and our people are our assets. In any company, it’s crucial to focus on the people side of the equation first and then the execution of what those people do to enhance the value of the investments that you’re making. We can do that in Houston. It’s also a very flexible and interesting environment to work in.
What is your overview of the current market?
In the multifamily business, we’re in a very interesting part of the cycle. It’s a cyclical business. We go up when the economy goes up and we go down when the economy goes down, primarily because of the way people consume housing. When the market’s booming, like post-pandemic when the market just started coming back, our business was so strong we could hardly keep up. People had lots of money in their pockets because they hadn’t spent any money, and they had received government funds. Then all of a sudden, there wasn’t enough room for people. You had high occupancies and rental rates went up dramatically. Then post that boost, you had an interesting time where people then started spending their money. The market responded by building more properties than we had built in the last 30 years. That’s nationally, but also in Houston.
Suddenly, you had this situation where we now have more supply and less demand. Previously, you had a situation where rents were going up very fast. Now, rents have flattened and are even going down in some markets. That dynamic is happening across the country.
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Houston, interestingly enough, is one of the better markets. The multifamily industry didn’t overbuild as much in Houston as it did in Austin, Dallas, Nashville or some of these other markets. The Houston market is doing reasonably well on a relative basis to the rest of the market. But rather than having an 8% or 10% increase in rents seen during post-pandemic, we’re now seeing relatively flat rents. We’re in the absorption part of an over-building cycle. Houston is doing much better than the rest of the country, though.
In the next 12 months, we’re likely to absorb that excess supply. Then from a business perspective, it’ll be a more rational economy rather than a boom where rents go up or they start coming down. Housing generally tends to grow at the rate of inflation or maybe slightly higher, but not much.
Also, the construction business is going to flatten out in the next 18 months. The interesting part of that equation is that housing demand continues to grow simply because of household formation and job growth. That sets up a good business case for the apartment business in 2025 and 2026 and for apartments in Houston.
What is the biggest challenge for your business?
The challenge in Houston and across the country is affordable housing. If you think about building multifamily properties, the cost of concrete is the same, whether it’s for affordable housing or not. It’s the same thing with wood products or appliances. The only change you can make in a construction system to make the housing more affordable is either land costs, where you build it out in the middle of nowhere where no one wants to live anyway, or you make them tiny. At the end of the day, affordable housing is a real challenge in every market. We have a construction company, and we’ve built over $2.5 billion in affordable housing. We’re trying to figure out ways to lower costs and increase the ability to build affordable housing in Houston. That’s going to continue to be a challenge that we all have to deal with over a long period.
What is your near-term outlook for Camden, and what are your top priorities?
Our next couple of years are going to remain complicated as we take the excess supply out of the market. After that, we’ll be in a much better position just from an earnings perspective. One of the things that we’re excited about at Camden is continuing to develop our people and continuing to provide opportunities for people to grow. Overall, over the next 18 months, the transaction environment is going to improve. The increasing cost of capital for the industry is benefiting Camden because we have very low debt.
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