Liiikh'r: 1' Macrngan 8mm Umcwn, '3- .- ——_—...-__—— PLACE IN RETURN BOX to remove this checkout from your record. TO AVOID FINES return on or before date due. MAY BE RECALLED with earlier due date if requested. DATE DUE DATE DUE DATE DUE _____J 2/05 worm.wms 4‘3? CORPORATE APARTMENTS: Provldlng Short-Term Houslng tor the BusInoss Community Gail Qanchak 81 5492 Plan 8 Paper December 4, 1990 TABLE OF CONTENTS INTRODUCTION ........................................................................................ 1. BACKGROUND ........................................................................................... 3 . THE CORPORATE APARTMENT DEFINED ................................................. 3.. PROBLEM STATEMENT ......................................................................... 5.. NEED ................................................................................................. 5.. LITERATURE SEARCH ......................................................................... .5. REPORT METHODOLOGY ..................................................................... 7. . Corporate Apartment Providers Sineyed ....................................... A FINDINGS ................................................................................................ .9 LOCATIONAL CONSIDERATIONS .......................................................... 1 4 PHYSICAL CHARACTERISTICS ............................................................ 15 Amenities ................................................................................ 1 5 Move-In Ready Condtion ............................................................ 17 LEGAL ISSUES ................................................................................. 20 FINANCIAL CHARACTERISTICS ........................................................... 20 Revenues and Operating Com .................................................. .20 Construction Costs ...................................................................... 22 Financing ............................................................................... 23 CORPORATE BENEFITS ........................................................................ 24 MANAGEMENT .................................................................................. 25 SOCIAL AND SOCIETAL IMPACTS AND IMPLICATIONS ........................... .27 INDUSTRY EXPANSION ........................................................................ 28 REVIEW ............................................................................................. 29 CONCLUSION ........................................................................................... .31 BIBLIOGRAPHY ........................................................................................... 33 CORPORATE APARTMENTS INTRODUCTION In ow mobile society, at any g'ven time. businesses requie employees at all levels to temporaily relocate to dfferent cities for short term assimments. The recent phenomenon and popula'ity of "corporate apatments' provides these indvidfals with housing alternatives other than hotels. A recent corporate apartment advertisement in a national professional iou'nal made its point througi tfree photogaphs; one of the typical business man that avails himself of the'r service. he was dessed in a suit and fie; the second, the landscaped setting of one of the? apatment complexes; and the th'rd. and Iagestphoto,ofthesamebusinessman,thistimedessedhshorts.tanktopand athletic shoes. ready with volleyball in hand, for a post workday workout. The advatising copy talks about cramped hotel rooms in relation to that apatments with all the comforts of home (and then some when you consider the often included amenities) at a cost substantially less than the hotel room would cost. ThecorporateapMmentisnotanew conceptbutasanindrstryitishits infancy. Corporate apatments have always existed on a small scale as a function of a local market. However, it is only within the past few years a substantial youth in the inchetry has occtrred. Property management frms across the country have realized the potential of this concept. As one example, and possibly the oldest, R&B Industries was an apartment developer and manager 20 years ago when they were f'rst approached to provide temporary living quaters for corporate employees who were being transferred to the Los Angeles a'ea for short term assimments or relocation. Now, they have developed into one of the leaders in the corporate aputment indist'y. WIIh 60 propertiesinfotrreg‘onsthatinclude moststmbeltstatesfrom the east tothewest mgr it coastsandtheWashington,D. C. aea,theyllst over 300 of the Fortune 500 companies esthe'rwents. R&Bmaybe the leader in the indisry considering its length of tenue. However,inrecentyeastheindustry haswitnessedaconsiderable influxof new management companies, with substantial numbers of owned and fee managed mite in the'r portfolios, entering into the corporate apatment marketplace. The tend is toward addtional g‘owth.‘ The fact that this use is materializing. almost invisibly, 'li communities all over this countrywithlittlegenersl understandngofhoworwhythishwpens. mekesitaprime topicforinvestigation. With this idea in mind, it isthe ptrpoee of this paperto examine the expandng, specialized residential use called corporate apatments so as to identify its peculia'. little noticed attributes. lnordertoaccomplishmistaskmerepathasbeendvldedhtofivesecfims. Afterthislntodiction,the Backgmmdsectionwtlinesthescopeofthetopic. Itbeg'is with a definition of the term 'corporate apartment,“ compa'ing today's reality to yesterday's perception It further includes a problem and neea statement estdiish'lig the rationale for preparing this paper; and the literatire sea'ch and report methodology sub-sections which describe where and how data was collected The Findngs section contains the body of the report. Specific topics, each mimely related to the development of a corporate apartment complex. 80 dscussed and analyzed These topics include: locational considerations, physical feattres, legd issues, fmancial chaacteristics, tax considerations. and special management techniqtes. Also in the Findings section. a discussion of possible social and societal impacts and implications, an identification of areas of emansion, and a data update from the time the orig'nal research was condlcted and the writing of this report, are undertaken. F inally, the paper concludeswith anattemptatpredctingtheriectionthisusewltakeinthefutue. "Telephone interview with Randy Schultz. dir. of Public Relations for R 8; B. Industries. by Gail Oranchak. 21 April 1988. BACKGROUND The corporate apatment of popula cultue, gorified by such sixties' movies as 'The Apatment' and ”Any Wechesday,‘ was reserved for use by only the most senior executives or important visiting clients of an organization. Its availability was one of the perquisites that came with the position—like the key to the executive washroom. The corporate apatment was typically located in the headwaters city with hrnitire and supplies provided by the corporation. Lease ag'eements were not unlike those sigied by any other buildng resident The image of today's corporate apartment has almost nothing in common with the one of th'rty yeas ago. For one thing, corporations 80 now providng short term residences for employees in all strata of the organization when they re being transferred or temporally assigied away from that home location. No longer isa'corporateapatment'only one isolatedunit in a maiorcityattachedtoacorporate headwaters. The term that has come to represent an indistry that is flouishing in support of the reality of today‘s corporate structues. THE CORPORATE APARTMENT DEFINED Conceptually. corporate apatments we not in competition with hotels. neither the national style nor the new suite hotels. for daily or weekly rentals. Corporate apartments us. however. an alternative of choice for many corporations and the'r employees who must temporsily relocate in a city for a month or more. and prefer the home-like atmosphere of an apartment rather than the temporary status of a hotel. The factors that set corporate apatments apat from regular apartments we the short term leases available and the variety of services provided by the apatment management company. Apatments we leased on a month-to-month basis. An informal indies-y standad existsthatreqi'resa minimum stayof one month. Thecorporate watmentie arranged and paid for by the employer and the apatment. althougi the same apa'tment astheregila'rental nextdoor.ismove-inreadyfor the corporate clientwhouriveswith iustasuitcaseofhisor her personal belong'ngs. Understandably. as with any iridisty. gadations exist within the corporate apartment industry. Providers of corporate apartments range in size from one apatment buildng manager in one city seizing an opportunitytofiflvacarnunitstothereg'onallyfowsedR&Blndustries. Justas corporate management companies dffer, so can the predict they supply and the segment of the maket they target. Both the types of management frms that are paticipating in the industy and the products they provide will be dscussed later it this report. There we common denominators however, which serve as a stating point for each one of the management companies that becomes involved in the corporate apartment indistry. These include: a need to fill apatments; a wilingtess to accept short term residents; and, the knowledge of. approach by. or active maketing of. corporations requ'ring short term housing for the: employees. For R&B Indisties, and others, this has gown into a substantial part of that overall business; for some management companies the cost of maintaining corporate apartments has been too higi and they have withdawn from the industry. Yet, for a growing number of apatment management frms. entry into the corporate apatment maketplace is a new concept to belried'mthe'r attempttofill vacantunitsandat the same time satisfy a needin the? community. It should not be overlooked that cost is perhaps the most important aspect attracting potential corporate clients to this concept; althougi, as you will later see, location is also a prime justification for paticipation. Corporate apatment suppliers will typically campus the housing and ancillary costs corporations will spend to lodge the'r employees in a hotel versus a corporate apatment. Even after addng the cost to provide firnishings and services, and the increased management fee charged for the addtional effort needed to provide this special wrangement, the cost of the corporate apwtment is 1I3 to "2 less than hotel accommodations. Althoug'i the contest savings are accrued by choosing the corporate apwtment housing alternative over a hotel. addtional savings can also accumulate for the pwticipeting corporation. PROBLEM STATENENT Awweness of the conceptual tanslormation of the corporate apwtment as an evolving land use and relatively new industry is not widespread. Written materials we nonexistent Except for the narrow universe of those who provide and thwe who receivawimhimecmfinesdmecupwateapwtmenthdisryjtfleismmvnabmflhs apparatus. Networking among frms providng this service does not take place. Entering memwketmewisfliat.mtinow.wiwgwizafimmustedicateiteelfflvwgitidwid HT“. NEED Informationisoriticalforthoseonbothsidesofthe emetion'lithecwporate apwtment indusry. prtment managers who we uninitiated in the workings of the corporate apwtmentindustrywilllewnaboutamethodtofifl apwtments 'I'i woes of hid) vacancy rates the to economic downtime or overbuildng Corporations may dscover a more pleasant and cost effective technicpe for housing that travelling employees. If done by the trial and error method, extra time and effort is requ'red to become educated about this residential system (that exists at some level in every major city in the country).at a time when the need may be more immedate than research times allows. Thwehasbeenanexpressedintwestonfliepwtofthosepublicationsthat provide information to apwtment owners and managers to see this topic resewched and publicized Discussions with trade organizations and publications also raved the infancy of the industry that is stugging to reach mattrity and sophistication. For the most pat, the concept has been igiored by the goups that represent apwtment owners and managers. Bob Sheehan. economic adviser for the National Apartment Association said the NAA has not been interested enoum to consider researching the concept or writing about it in the“: publication UNITS.2 Althougi the AOMA Newsletter (prtment Owners and Managers Association) reported briefly on the corporate apwtment tend, spokesperson, Robert McGougi, said they want no father than to point out the fact that corporate tenants we good tenants to have because they typically provide addtional revenues in the form of sirchwges over and above that collected from regilw apartments and they we not always in residence. They recommended to the'r readers who mig'rt be experiencing vacancies to contact major industries in the'r wee and Vy to mwket this concept3 In addtion tothosewho we now involved, or who may benefit tom pwtic’pation in the futtre. this project will also inform local officials of a use that is becoming more widespread in the major cities of this country. Information from this report can be used to assess policy issues relating to this type of housing. Service providers outside the curent indistry can gain knowledge of potential new mwket. In ligit of the facts as outlined above, an understandng of the industry as it exists today and an attempt at showing where it is going in the futtre we necesswy. LITERATURE SEARCH Literattre sewches could not uncover any writings about corporate apartments. Direct contact with staff of several industry publications supported this frndng Bob 2Telephone interview with Robert Sheehan, economic consultant to the National Apartment Association. by Gail Oranchak. 16 June 1988. 3Telephone interview with Robert McGough, Apartment Owners and Managers Association of America. 15 June 1988. Sheehan, economic consultant to the National prtment Association (publisher of UNITS magazine) believed it is impossible to get data because the industry is it its infancy and participants we not secu'e enougi to shwe the'r timings. The data that is available is too controversial die to minute sample sizes and lack of national scope and would not meet standards for resewch analysis‘. Bob McGougi of Apartment Owners and Managers Association of America (Watertown. Ct) had some knowledge of the reasons behind seeking this type of tenant and the‘r attributes but little more. Representatives of the National Society of Professional Resident Managers (Washington, D. C.) and prtment Management Newsletter (New York City) were completely uninformed and would consider publishing an wticle about this concept. Cfristine Williams of the Real Estate Research Corp. (Chicago) was familiw with the conceptendalsowiththelack of written information except for one newspwaer wticle written in the Chicago Tribune. Contact with industry insiders futhw demonstrates the need for documentation of the industries practices and procedres. REPORT METHODOLOGY The information for this report was gathered primwily tfrougi d’ect telephone intwviewswiflipwfidpantsmthecwpwateapwtmwnkidistyandfromprimd materials received from some of the strveyed frrns. Sauces were fomd drougi magazine advertisements, referrals from contacts, and by sewching the “yellow pages" of major US. cities for corporate apartment advertisers. Obviously, this was not a scientific sample since sample f'rms were not chosen from a known universe using approved statistical methods and, therefore. it is possible some sigiificant fims were not contacted. A list of organizations contacted in connection with this report. and the person interviewed. can be found at the end of this document. 4Sheehan. 16 June 1988. Corporate prtment Providers Surveyed In researching this concept, numerous management frms ctrrently active in the corporate apwtment industry were interviewed by telephone. Each one. dependng on the'r location, size, length of time involved, and level of involvement, had that own method of performing within the broad concept of ”corporate apartment.“ typically using the “Vial and error‘ approach to establish a system of product development and deliva for that mwket. This illustrates the newness of the industry and the lack of networking that exists. a function of both the infancy of the industry and the possible unwillingiess of experienced management frms to shwe the'r knowledge with potential competitors. Typically there is someone in every city that has decovered the benefits of leasing mite to corporate users; however, for the pupose of this report an attempt has been made to establish contacts with management corpwations of vwious sizes. in a vwiety of cities. andin dfferentreg‘onsofthecounty. Thissectionoftl’rereportwillhigiligtt the tillerent corporate apwtment providers selected as examples. and it will also include a briefoverviewofhowthey enteredthemwketandwherethey standwithintheindastyat this time. The list of management companies to be higtligited include: R&B lnckrsties of Lee Angeles, a provider of corporate apwtments for the past 20 yews. Lincoln Properties and Southmwk Corporation both based in Dallas, and both new envies 'lito theindusvyhavingbegunservingcorporateclientsinthepastyew. The Georg‘a reg'onal office of Balcor Suites which has been providng corporate apatments la the past three yews. KormanSuites, established one and one-half years ago and serving the tri—state wea of Pennsylvania, southern New Jersey and Mwyland. Tahoe North, one of six apartment complexes managed by Metro Atlanta Properties and located in subtrban Atlanta lnkeeper Associates, providng a vwiety of locations within San Francisco on a relatively small scale and, Executive Tim—Key Rental of Toledo, Ohio. a veteran of five yews in the corporate apatment indislry. FINDINGS Among the frrns strveyed. R&B Industries has the longest tantra ii the corporate apartment industry and therefore, the most sophisticated organizationd structue. R88 began as a property development company in the late l960’s. Du'mg the 60's and 70's they constructed apwtment complexes undw the name 'Odtwood prtments.‘ The mwketing strategy for these apwtments has always been to provide accommodations to a segment of the housing mwket whose needs were not being met- the short-term renter. With this strategy in mind Oakwood prtments offered shat-term residents spacious hmished or unfinished apwtments on a month-to-month rentd basis with immedate occupancy possible. From this basis it was easy to provide the list corporate client that approached them for temporwy living accommodations la in employeewiththesameswvicesRathrovidedtothei'regtw apwtmentrentwa Approximately 15 yews ago, again from the requests of corporate clients, R&B expanded to include move-in ready services-linens. dshes. TV. and maid service for the huddled apwtments. R8: Bnolongerdevelopspropertiesbutrestrictsitsopwationstothe management of commercial and residential properties. The residential propwties include not only the standwdzed. easily identifiable 200-300 unit Oakwood prtments orig'nally built by R&B in the 60‘s and 70's. but also fee managed properties of any style withasmanyes1500units, atolwhichnowmake uptheOakwood prtment cha'i. Within these 50+ properties located in the sunbelt and the Washington, D. C. was there is a fifty-fifty split between conventional and corporate renters) Lincoln Properties of Dallas Texas, a real estate management corporation with properties in Texas and Philadelphia, is a new entry into me corporate apatment industry, wrang'ng the'r frst corporate rental in December. 1987. At this time the corporate apwtment concept (the provision of a finished apartment in move-in ready 5Schultz, 21 April 1988. condtion with maid service) is still auxiliwy to the'r main function of providng apwtments to tracitional renters. However. Lincoln Properties would like to become more involved in the corporate apartment industry and they intend to actively mwket this new aspect of the? business. Curently only one of the'r properties, a new facility that had vacancies and met the locational needs of the corporate client, is on line as a corporate apwtment complex. The impetus for Lincoln's entrance into the corporate apwtment industry was the downtu'n in the Texas real estate mwket. prtment management corporations, like Lincoln, we investigating innovative ways to bring in supplemental revenues. Lincoln Properties foresees the promotion of addtional units in other wees where there is a potential mwket to twget for this service. They also anticipate mwketing IUIII‘O phases of steady established complexes as corporate apwtments.6 Like Lincoln Properties, Southmwk Corporation of Dallas, Texas has only been involved (at their corporate level) in the corporate apwtment indisty for the past six months, althougr 'm the field indvidial apMment managers have been providng this service 'forever." And, Rte Lincoln Properties in the last half yew and R88 Indish'es 20 yews ago, Southmwk's interest in corporate apwtments began as a need to reduce the'r vacancy rate. curently at 20%. They were also mwket driven to the extent that they fill the need of a specific segment in the temporwy housing mwket. Potentially, Southmwk hastheabilrtytostrpassRaBlndrstiies in the number of facilities pwticipating in the corporate apartment stucttre althougr the segment of the corporate mwket twgeted by Southmwk may be diferent than that of R&B Industries. Southmwk Corporation has recently merged with Johnstown Management Corporation of Atlanta, Georgia. This has created a corporation of 600-800 properties nationwide with 175,000 units under the management of one corporation. Forty thousand of these units are fee managed, the remainder we both owned and managed by Southmwk Corporation. The majority of the l"Telephone interview with Joyce Eldridge, representative of Lincoln Properties. by Gail Oranchak, 15 April 1988. 10 properties we not Class A or “upscale“ apartment units, althougt most have a certain level of amenities, and this plays an important role in the targeted mwket. In contrast to the Fortune 500 companies that R88 Industries claims as that clients, Southmwk Ptoperties sees itself as filling the need for temporary residences of othw than senior level personnel. For example, they provide temporwy housing for audt teams, temporwy construction personnel. and nwses on temporwy assigiment 7 Another fa'rly recent entry into the corporate apatment indistry is Balcor Suites, an affiliate of American Express. The George reg‘onal office. which manages complexes in the north Atlanta subtrbs, was strveyed for this report. It has been paticipating in the industry for only the past two to three yews. The impetus for decking to establish a corporate apwtment dvision seems to have converged on both the national and local offices at about the same time. Local apwtment rental offices of the Balcor Management 00., such as those in the Atlanta sum’bs, saw people entering the'r facilities, looking for short-term temporwy housing, who were in Atlanta either on short term assigiments or as new transfers wanting to familiwize themselves with the was before purchasing a home. Seeing the need to provide an alternative to long hotel stays, local managers approached the national office for approval to mwket the corporate apartment concept. The national headwaters had also hewd about the conceptandwhenapprcachedbythei’fieldagentswiththeproposeltosetupthe concept at Balcor properties, the national corporate leadership ageed it was a good idea and approved the strategy. Now, reg'ons have been set up across the county and suite representatives mwket the corporate apartment concept in each wea.8 7Telephone interview with Howard Haring. representative of Southmark Corp., by Gail Oranchak. 19 April 1988. 8Telephone interview with Bernice Wright. representative of Balcor Suites. by Gail Oranchak. 15 June 1988. 11 The Korman Company has been developing and manag‘ng real estate in the Philadelphia was for sixty-five yews. For 10 to 15 yews, Korman supplied corporations with short term hrnished apatments. but only on a small scale. With the establishment of KormanSuites eigiteen months ago, the Korman Co. geatly expanded the'r involvement in the corporate apartment indistry offering services that range from a simple furnished apwtment to an apwtment that includes a hill range of services and amenities. Ninety per cent of that clients opt for the complete package, only those who we on a strict pw dem, government emuoyees for example, will choose the minimum offering. KormanSuites curently manages twenty-three properties in the ti-state wea— Philadelphia, PA, southern New Jersey and Baltimore, MD.,twenty of these properties were also built by the Korman Co. The'r representative stated that by establishing KormanSuites. the Korman Co. capitalized on both a need that existed in the metopolitan weastheyserveandontheassetstheyakeadyhad—ahigi level of giality intheservicestheyprovided, the cleanliness of that units and the maintenance of the'r complexes. The Co. estimates that 50% of the units available at the twenty-tree properties we curently leased as corporate apwtments.9 Thehotelindustryhasnotbeenblindtothefactthatthisneedexistsintheshort- term housing indisry. lnkeeper Associates is one example of how. as an industry, hotels may become involved in the hints. lnkeeper Associates is a hotel management frm that has established an apwtment mwketing dvision. Untke the apwtment management frms that have been previously dscussed, lnkeeper does not own apartment buildings. They lease unfinished apwtments, at twelve dfferent locations in San Francisco, cirectly from the apwtment owners. They then sublease the fully funished apatment to the corporate client. They mwket this concept under the title lnkeeper Associates Corporate pr'tments. They cater to a select goup of 9Telephone interview with Kathleen Eicholtz-Umani. Corporate Account Executive with KormanSuites, by Gail Oranchak. 26 May 1988. 12 corporations targeting the'r units to the upper level management executive. Because of their selective mwketing strategy, they only maintain 50 units at one time. '0 Tahoe North has only 21 of its 508 units occupied with the employees of corporate clients; yet, this constitutes more units set aside as corporate apartments than any of the other seven apwtment complexes owned by Metro Atlanta Properties, Inc. Metro Atlanta, like so many other frms is just getting stated in the industry. Similw to lnkeeper Associates method of providng corporate apwtment, althoug'r not a spin-off of the hotel industry, is Executive Turn-Key Rentals of Toledo, Ohio. They we a small provider of corporate apwtments who functions by renting apwtments from management companies, than finishing the apwtment in move-in ready condtion, and subsequently sublease the apwtment to a corporate user. U The common element linking the dscussion of the sample cases is the orig'nal reason for pwticipation in the corporate apwtment indistry. Each one of the management companies had a need to fill vacant apwtments. Not one of the management companies curently involved in the corporate apwtment industry considered this as the first use of that properties; and, it is unlikely that apwtment management companies will provide this service in an apwtment complex that is experiencing a low rate of vacancy. As one interviewee commented. it is also a method of renting the least des'rable units in a complex. An apwtment may be unacceptable to a long term resident; however, short-term residents, who we not paying the'r own rent, may not be as dsoriminating. Additionally, in many instances, the corporate client approached the management company to request the service. From the corporate clients side, employees prefer the home-like atmosphere of apartment complexes and loTelephone interview with Mark Weiner, marketing representative for lnkeeper Associates, by Gail Oranchak, 26 May 1988. I ITelephone interview with a representative of Executive Turn-Key Rental, by Gail Oranchak, 15 June 1988. 13 corporations we able to provide housing at a substantially lower com than requ'red when an employee stays in a hotel. LOCATIONAL CONSIDERATIONS In physical desig'i and construction a corporate apartment is no afferent from a tradtional apwtment. Typically, apwtments now being used for corporate apfiments were orig'nally built to supply housing for the radtionel rental mwket. In the case of R88 lnduslries' “Oakwood Apatments,‘ complexes built in southwn California were orig'nally intended to provide short term, month-to-month rental, althougi not the corporate user. Even for a major supplier of corporate apwtments like R88 Indistries the ratio of corporate apartments to tradtional apwtments dffers from one complex to another. '2 What makes one complex more attractive than another to the corporate user? LOCATION-LOCATION—LOCATIONI The primwy consideration was proximity to good transportation services. In auto dependent wees like southern California this meant access to freeways. ln cities where public transportation is exceptional, Washington, D.C.and San Francisco for example, a location new the public transit facility is des'rable. Proximity to a‘rports is another locational amenity. Oakwood boasts that the'r properties have an average travel time of 20 minutes to the wea's major airport. Another important locational consideration for the upscale. senior executive level corporate users, is the proximity to special reg'onal features. R88 Industries records that higiest corporate occupancy rates in that complex at the Long Beach Mwina where 82% of the complex is leased to corporate users.’3 In San Francisco, lnkeeper Associates stated that a main attraction of their units was the proximity to the Financial District and the fact that parking was included in the rental, something that is hwd to ”Schultz. 21 April 1988. l3Schultz, 21 April 1988. 14 come by in this city.M Balcor Suites of Georgia has most of the? units in the upscale northern suburbs of Atlanta where many of the corporations using this service have offices. '5 Representatives from all the f‘rms strveyed ageed with the assessment by the R88 lndustries' representative, location was the most important aspect of an indvidJal complex's attractiveness to a corporation for use as a corporate apwtment. Proximity saves both time and money for the corporation as well as being convenient for the employee. The location of a complex chosen by a corporate client for use as a temporwy living unit for an employee is dependent on the work related destination of that employee. This may reqr're easy access to a downtown was via freeways or ptblic transportation,or to a satellite subtrb using private transportation. PHYSICAL CHARACTERISTICS Amenities After locational considerations, physical chwecteristics play an important role in determining where a corporate user will place that employees. As dscussed previously. dfferences exist between the twget mwkets of organizations providng corporate apwtments, and this dlference can be dectly related to the physical characteristics of the complexes they manage. R88 Indistries orig'nally developed the Oakwood Apartment concept to fit the specific lifestyle of southern California and the needs of that twget mwket—short—term rentals. Attention was paid to bulking and landscaping design details. The standard Oakwood Apartment, f'rst developed in the 1960's, included a variety of amenities in its design plan - night-lighted tennis coats, swimming pools and spas, fitness centers and g'ant screen TV theaters. R88 lndrsties HWeiner. 26 May 1988. isWright. 16 June 1988. 15 has always seen that facilities as the perfect 'frst edwees' for people locating in a new wee. R88's fee managed buildngs may not have all the des'red amenities located on the premises as the orig'nal Oakwood Apartment chain, dependng on when they were built. In the case of buildngs aready on-line when management is assumed. provisions have been made to offer these services to the'r clients at new-by facilities.l6 0n the other side of the issue, Daniel N. Epstein, developer of 77 W. Hiron in Chicago became awwe of the gowing corporate apwtment mwket in that city tiring the buildng's construction stage. To twget the typical Oakwood resident as opposed to the conventional apartment mwket, a convention center and lwger health club and pool wereadded. UndertheOakwood name60%ofthe304unitswe corporate apwtments. '7 Most management companies capitalize on the amenities they have available by inducing descriptions of the properties and the services they provide in the pubficity brochues that we dstributed. After locational attractiveness, lnkeeper Associates, for example, points out the amenities provided-choice of wchitectiral styling in the diferent buildings where they have apartments; availability of pwking; apwtments with freplaces, views, and decks; and possibly access to swimming pools, saunas and tennis couts.‘8 Similwly, Tahoe North's advertising brochlre frst ciscusses the “California contemporwy wchitectlre, wooded surroundings, attractive landscaping and prestig'ous location,‘ and then points out the ”modern health and recreation facilities where the active adult can enjoy: jogging trails, four lighted tennis courts, three swimming pools, heated jacuzzi. and a cabana with bw and showers" Even before active amenities of tennis corrts, swim clubs, hot tubs, golf courses, nautilus machines, and exercise room “Schultz, 21 April 1988. '7]. Linn Allen, “Apartments Go 'Business Class.” W93, 26 August 1990, Sec. F, p. 2. 1. l8Weiner, 26 May 1988. 16 with equipment, KormanSuites wants to attract that clients with service amenities such as: easy access to general managers, maid service, complimentwy continental breakfasts, a concierge at each location, chauffeued transportation, conference rooms and meeting rooms. '9 In contrast to the previous descriptions of luxiry living that is attractive to the corporate executive, Southmwk Corporation describes that properties as 'neat wld clean“, well maintained and with a basic level of amenities, a swimming pool and possibly a fitness room or sauna. They do not expect to affect the same level of clientele with this type of facility, as R88 lndrstries, KormanSuites, Tahoe North or lnkeeper Associates twgets. They have amassed the'r attributes and wasted the'r mwket strategy to a dfferent user level. Ctrb appeal and comfort have been defined by Lincoln Propertiesasthetwomostimpoltantatt‘ibutesfollowinglocation. Afacfity does not havetobeplusl'ltofulfillthoseneeds for that mwket. Theavailability, vwietywld quality of amenities provided by a management company has a definite bowing on the mwket to be twgeted and the ultimate decision of a corporate user.20 Move—In Ready Conition The most unique attribute of the corporate apwtment concept is the move-in ready condtion of the units. The management company provides hmishings and eqripment to the corporate tenants that makes living in a corporate apwtment seem Ike home. Each management company has established its own method for providng the necessary funishings and equipment. R88 Enterprises has developed the subsidary approach. Within R 8 8 Enterprises is the R 8 8 Management Company which has drect management over Oakwood Corporate Apartments—the wade name given to distinguish corporate units from tradtional rental units. R 8 8 Home Services, another subsidwy of ‘9Eicholtz-Umani. 26 May 1988. 20Haring, 19 April 1988. 17 R 8 8 Enterprises, provides the housewwes packages which may be leased on a monme basis in conjunction with and in addtion to the monthly apwtment rental. Information on for: diferent housewwes packages was available. All of the housewwes packages include linen service and two of the packages include maid service as well. With this type of arrangement the total cost was broken down for the corporate decision— meker into apwtment rental cost and housewwes package cost. Therefore, diferent combinations of housing unit and housewwes package could be easily tailored to the requ’rements of the corporation and the needs of the specific user.“ At Lincoln Industies the method for hmishing and equipping apwtments was handed a bit diferently, althougl Lincoln also has subsidwies. In pat, the dfference was a function of its newness in the field of corporate apwtment management. It is anticipated that as Lincoln becomes more involved it the indisty they will modly that procedxe througl the tial and error process. Lincoln Properties was steady in the practice of providng hrnished apwtments and accomplished this tltougl that own funitu'e company where they were able to pitchase funitlre for the corporate apartments at a dscount. To accomplish the move-in ready condtion of the apwtments, one person was in chwge of determining which items were needed and then rid the shopping. Lincoln Properties has not yet developed a sophisticated system like R88 Industries that allows the corporate user to personalize the apwtment and housewwes to the employee. At Lincoln Properties, apwtments and housewwes-inducing washers and ctyers in each unit, microwaves and weekly maid service, we rented as one unit.22 Southmwk Corporation has a diferent approach to furnishing the'r units than either R88 or lincoln Properties. This difference, to some extent, is based on their marketing strategy which will be discussed later. They we still unswe of the extent to which they will become involved in the corporate apwtment mwket and for that reason 2'Schultz, 21 April 1988. 22Eldridge, 15 April 1988. 18 we making long-term investments cautiously. The method for hrnishing apwtments is dependent on two factors. If they anticipate a strong mwket for this use, or they have a long term commitment from a corporate user, Lincoln will consider puchasing the necesswy furnishings and equipment. Until then, they prefer to rent the necesswy equipment from a company then provides this service. They do not intend to add special featues for this mwket. For example, all that complexes have laundy facilities on site, some apwtments have washer and d'yer connections and others have the washers and dyers memselves. Any of these may be rented by a corporate user, but they will not add launwy facilities to an apwtment specifically at the request of the renter. Maid service can be provided as an option.23 The other management frms srrveyed provide hrnishings in much the same way as previously dscussecl Dependng on that size. confidence in that mwket, andor its availability within that own organization to supply needed items, managers of corporate apwtments will either pachase througi the't own subsidwy. as lnkeeper Associates doestlvougladesiglgoupthatispwtofthecorpwation andhashrnishedalltln’r corporate apartments to the point that they now have built up an inventory to dew from for futue use; or, they may ptrchase hrnishings themselves, as Balcor Suite's Georg’a reg'onal representative has done does in some of the'r units, knowing the use would be long term“; or they may rent hrnishings from one of the many fitnitlre rental companies available in all metropolitan wees as Executive Tim-Key Rentals has done. 25 23Haring, 19 April 1988. 24Wright, 15 June 1988. 25Executive Turn-Key, 15 June 1988. 19 LEGAL ISSUES From dscussions with representatives of each management corporation cited above, it has been determined that the introduction of corporate apwtments in a community does not violate local ordnances, nor is there any anticipation that problems will wise in the hltire. Since the construction of the orighal apartment complexes conformed with local zoning and buildng requ'rements for multi—family struchtes, and the corporate apartment concept has not been interpreted to be any cifferent than a typical short-term lease wrangement, it is the'r Opinion that this concept legally conforms with local edcts. To protect themselves from any possible violation of the local ordnances, Southmwk Corporation has put a stipulation in that lease that prohibits the use of the corporate apwtments for business activities.“ Other than this one emulation, none of the corporate apwtment providers had experienced or were expect'ng futher legal issues. FINANCIAL CHARACTERISTICS Revenues and Operating Costs Fee structues were dependent upon operating costs and each one of the corporate apartment providers swveyed had first own method of determining costs. R88 Industries, as mentioned previously, provided the corporate decision-maker with the opportunity to choose an indvidualized package. The cost of each housewwes package depended upon the number of items or services provided within the particulw package and the size of the apartment being rented. The VIP. Executive Package, The Executive Package, The VIP. Corporate Package or The Corporate Package could be used in conjunction with an efficiency, one bedoom or two bed'oom apwtment The “Haring. 19 April 1988. 20 cost of the packages ranged between a high of $311.00 for a two bectoom apwtment with the VIP Executive Package and a low of $170 for the Corporate Package in a studo apwtment. Prices quoted were from a 1986 brochue, information on clrrent costs were not available. For R88 the mwket rental of the apartment and the cost of hrnishings we included as one fee. The cost for housewwes, soft goods and maid service make up the second fee. Together these two we the cost to the corporate user. Included in this chwge is the mwk-up or profit to R88 Indistries.” Lincoln Properties determined that location played an important role in enabling them to chwge enougi to recapture that operating costs. In the Dallas wee, where that property housing corporate apartments is located, the operating costs we two times the rental chwge, an acceptable ratio. However, in other parts of Texas where they manage properties, therentalfeeswesosmallthatoperating costswould be in excess of two times the rental, reducing the ability of the corporation to recaptue that expenses. 23 Southmwk Corporation estimated the monthly chwges of that corporate apartments by frst taking the base fee of the full mwket rent. To that they added the cost of all the additional fitnishings equipment and services provided-utilities, telephone, hrnittre, soft goods (linens, towels. housewwes, appliances), cable, maid service, and a location fee. To this subtotal they added a 10-20% mwk-up for services. This 10-20% reflects that negotiable profit mwg’n.29 Many of the upscale providers, lnkeeper Associates, Tahoe North, KormanSuites and Balcor assess thet fees in the same way as the Southmwk Corporation; however, they typically adjust their final charge by 20-25% representing a management fee that compensates for the addtional cost to install and service corporate apwtments. Corporate apartments do entail a geat deal of extra time and effort on the part of 27From documents given to prospective renters. provided by R 8 8 Enterprises, April. 1988. 28Eldridge, 15 April 1988. 29Haring, 19 April 1988. 21 apartment employees. The simple fact that the corporate apartment turnover is typically three to six months in dilation, as compared to the potential annual ttrnover for regular apartments, multiplies the requ'red servicing by two to forr times. The determination of actual operating costs within the apartment industry as a whole is not an easy task. Even on a general, national level, information sharing is not widespread. The Institute of Real Estate Management annually strveys apwtment owners and managers and compiles the information gathered into the'r Income Expense Analysis for Conventional Apatments. Bob Sheehan, the economic adviser to the National Apatment Association stated that the national information is very good, but the most useful information, the reg'onal and metropolitan break-downs. as controversial because of the small sample of respondents compaed to sirveys dstributed. 30 When it comes to corporate apwtments, no data is available. This indusry is so new that it is only just beginning to be dscussed among indrsry paticipants and analysts. it may be possible, with a copy of the analysis at hand. and reliable information from corporate apatment providers (unfortunately, they we not very willing to share financial information) to more thoroug'ily evaluate the revenue and operating expenses, making comparisons to past data to determine the industry's income gowth potential and returns. Construction Costs Of all the companies surveyed, only the Korman Co. is actively involved in property development; although they are not building any new apartments at this time. Of the other organizations studied, R&B Industries, Southmark Corporation, Lincoln Properties and Balcor are all property management frms, not developers; while lnkeeper Associates is a subsiday of a hotel management frm and Executive Tun Key Rental has developed an opportunistic leasing and then subleasing procedtre. Althoudi 8&8 30$hcehan, 16 June 1988. 22 Industries was, at one time, a major developer of apartment structures in southern California, they no longer paticipate in this aspect of the real estate industry. Each of the frms interviewed uses the corporate apatment concept to fill apartments that are aready on line. None of the frms are curently in the field of constructing new complexes, and none of them saw the potential for constructing apatment complexes for this use specifically. Due to these c'rcumstances, construction costs were not a part of the dscussions with the representatives of the various corporations surveyed. Construction costs may be estimated, however, by using various methods. The most viable ' procedue would be to use one of the construction cost services, Marshall and Swift Company of Los Angales or F. W. Dodge Company‘s Manual for Buildng Construction, Pricing and Scheduling. Financing As with construction costs, a dscussion of constuction financing was not applicable to the curent status of corporate apatment providers. However, to g've a general impression of the apartment construction financing prospects for the 1980's the article by Edwad C. Caman, .k. and David A. Smith entitled 'Rental Housing in the 1980's“ and appeaing in Ma'chlApril 1986 issue of the Jounal of Property Management was consulted. They determined that unlike the 1970’s, when apartments were financed with long-term, low-interest assumable mortgages; the 1980‘s would see a shift in the types of financing available to apwtment developers. Two potential sources of fundng were (iscussed: pension funds and foreign investors. In addition, new financing techniques were highlighted including, joint venttre financing, with lenders and builders in partnership; and accruing mortgages.“ 3 'Edward C. Carmen, Jr. and David A. Smith. Rental Housing in the 1980's.” Iggrnal of BMW}, March/April, 1986. p. 46-47. 23 TAX CONSIDERATIONS Corporate apartments themselves we not taxed any cifferently than other multiple family housing units. Tax considerations we more important to the corporate client and may have an impact on a corporation's decision to chowe a corporate apwtment over a hotel. Hotel taxes we almost universal in major cities wound the country. This adds an addtional percentage to the total hotel bill above and beyond the daily rental fee. In Philadelphia, for example. the combined city and state sales tax that isaddedmtotals11%.Considwingthelengthofstay,tl'ietaxbillalone can be substantial addng one more reason for a wporation to choose a corporate apwtment over a long hotel stay for an employee. CORPORATE BENEFITS Cow rediction is undoubtedy the prime benefit to the corporate client. Not only isthecostperdayforhousingredrcedby "3 to 1I2, andthey avoid pay'ngthe simificant hotel tax; but addtional savings may be realized by not having to reimbtrse employees for restairant meals when they we supplied with a fully equipped kitchen and can provide the'r own meals. From the corporate employees perspective, (and in ttrn the corporation is rewwdad with contented, more efficient and more predictive personnel), the comfort of living in an atmosphere that is more like home than a hotel is an important benefit that corporate apwtment managers higiligtt extensively in the'r mwketing campaigns. Oakwood Apartments refers to themselves as the 'Un-Hotel,‘ KormanSuites recommends “A Home Instead of a Hotel.‘ Tahoe North refers to that units as “Instant Homes.” Balcor Suites suggest the g'eater ease with which employees may invite that families to come and stay with them in the'r temporwy home when it's a corporate apartment rather than a hotel. 24 MANAGEMENT Management techniques dffered with the level of involvement in the corporate apartment mwket and the scope of the management companies interests. This section of the report will give a sampling of the organizational systems various apwtment management corporations have established to deliver the'r product, higiligtting the differences in their approaches and the reasons for those (ifferences. R&B IndJstries has developed the most sophisticated management operation that involves regional offices with regional managers and staffs to mwket and service their clients. Three regions-the fw west, the southwest and Washington, D.CIV'rg'nia we delineated. Tires segments of the economy we serviced—government, militwy and corporate clientele. kaeting specialists or sales representatives serving each one of these wees are available to serve their clients.32 Balcor Suites has also uses a decentralized system of management and ' mwketing. The nation has been segmented into reg'ons. Within each reg'on one pwson is responsible for mwketing the concept and setting up units that have been rented. Each reg'onal office is basically on its own to establish management policy and technicpes. The regional representative for the Georg'a reg'on goes (hectly to each complex and schools the employees on the procede she has established. Many of the decisions may be made by the local apwtment manager, since they typically have a better gasp of the'r local mwket; for example, the manager may decide on the qualrty of furnishings to ptrchase or rent for the unit dependng upon the mwket they serve. The national office in Skokie, Illinois may be consulted for advice on marketing or other issues but declarations do not generate from that office.33 For Lincoln Properties management of their corporate apartments has been delegated to one person who has the responsibility for soliciting clients and overseeing 32$chu1tz,21 April 1988. 33Wright, 15 June 1988. 25 the preparation of apwtmentsfi‘I This small one person staff points out the fledging status of their involvement in the corporate apmment induety. At the present time that shwe of the mwket is made up of one apwtment complex with fifteen units being used for corporate apartments. This method is typical for management frms that we dealing either with small number of units or in very localized weas, such as KormanSuites in Philadelphia. Southmwk Corporation, althougr also new to the corporate apwtment industry, is involved in developing standardzed management techniqres that involves educating the indvidual complex managers about the corporate apwtment mwket. This educational process would include: identification of client needs, how to service those needs, and specifically, how to develop the corporate apwtment mwket in the'r wea. Because they manage apwtment complexes nationwide, Southmwk feels it is in the'r best interest to train local managers who we more familiw with the'r own mwkets to the possibility of providng this concept in the'r wea, if the local manager sees a potential mwket. Managers Will be responsible for creating demand for the’r units as corporate apartments. This will be a new responsibility for apwtment managers who have not been trained to mwket the'r units. Typically, they we used to waiting for the renter to come to them, but with Southmwk's new strategy apwtment managers will need to approach business, to become more sales oriented, to develop good people skills. This will be the focus of the training progam the corporation is developing for its field managers. 35 The KormanSuites Corporate Account Executive handles the marketing and establishment of units within their complexes. After location she claims SERVICE, SERVICE, SERVICE is the most important aspect of their operation. With this in mind “Eldridge. 15 April 1988. 35Haring, 19 April 1988. 26 they conduct a training progam for that staff that covers all facets of apwtment management, with corporate apwtments as only one focus.36 SOCIAL AND SOCIETAL IMPACTS AND IMPLICATIONS From the perspective of the corporation contracting the service, the most sigrificant impacts gained from the corporate apwtment concept is a more efficient employee. The corporate client not only receives substantial cost savings (the cost of a corporate apwtment is estimated to be one half the cost of hotel accommodations) but also the comfort of the employee benefits the corporation with geater productivity. Families that may have been subjected to extensive sepwations due to one member's employment responsibilities we now afforded the opportunity to accompany, or at least visit, in suroundngs that we more home-like than a hotel. For the provider there we both pros and cons to this wrangement. On the positive side, the typical corporate apwtment resident is a business person with al the attributes managers want to attract: stable lifestyle, consistent income, etc. On the other hand, the hyper-transient nattre of the resident is not compatible with the tradtional apwtment renter. Depandng on the percentage of corporate apwtments to tadtional apwtments a sense of community and shwed experience may be lost. For some provides who we using this concept to fill vacant apwtments, advertising is done selectively and sepwately because it is felt that it is not necesswily attractive to regulw renters to be in a buildng that mwkets for cwporate apwtments. Since corporate apartments are occupied by business persons living temporarily away from the'r primwy residence they cannot be expected to demand certain public services such as schools. In addition, the impact on other public services, like road 36nchottz-Umeoi, 26 May 1988. 27 systems, may be reduced since residences that would normally be lived in by two to fotr people will only have one resident. In add'tion, this new concept may provide for the increased viability of communities that have been experiencing economic hwd times, or that mig'tt have experienced them, if apwtment complexes could not fill the'r vacancies. This is not to say that vacancy rates we not still substantial in many locations wound the county from overbuildng and the downtrrn in some sectors of the economy, but this concept allows for the utilization of resorrces that may otherwise be subjected to deterioration througi negect from a lack of financial reserves and a reduction in support they may provide a community via property taxes. INDUSTRY EXPANSION The corporate apartment industry appears to be in a gowth mode. In the last 15 months, in addtion to both Lincoln Properties and Southmwk Corporation's entrance into the mwket, at least two new corporations have been spawned. Corporate Lodg'ng Services located in Memphis, Tennessee has been formed to fill a gap that the large regional suppliers have left open. Corporate Lodging Services acts as an intermedwy between a corporation needng temporwy short-term housing for an employee in a city that may not be served by one of the Iwge regional corporate apartment provider. Corporate Lodging Services is not tied to specific units but is able to coorcfinate between a corporation in need of housing facilities and an intividual provider of those facilities anywhere in the nation. They handle the needs of auditors, consultants or training goups, for example and they can accommodate the needs of an individual family relocating to a new area and requiring temporary housing arrangements.37 ”Telephone interview with judy Smith, Vice-President of Corporate Lodging Services. by Gail Oranchak, 21 April 1988. 28 Similarly, Corporate Suites located in Dallas, Texas and Manilow Executive Suites in Chicago behave like Corporate Lodging Services but on a much smaller scale, concentrating the'r efforts in the cities where they are located. For example. Manilow Executive Suites ”leases blocks of apartments at a dscount, than furnishes, eqrips and re-rents them."33 In the ten years Manilow has been in business the number of apartments rented as corporate apwtments has expanded from six to one hunded and forty-nine. Corporate Lodging Services, Corporate Suites and Manilow Executive Suites have resewched the potential for this service and see substantial futtre demand resulting from the strong economy. To prove this fact Corporate Lodging Services alone has opened for: new offices in the fifteen months since they began operation. REVIEW The bulk of data compiled for this project was done in the summer of 1988. In the interest of supporting the findngs and conclusions of this report an effort was made to update the information by contacting the representatives of corporate apwtment providers who were interviewed in 1988. R 8r B Industries, pwent of Oakwood Apartments, continues to be the industry leader expandng into mwkets where they see the rig'tt components while retaining the'r established mission and structue. Those who were relative newcomers in 1988 we still tinting the'r niche, evaluating the'r performance and adusting the'r service as experience warrants. One such participant is Balcor Management Company which initiated Balcor Suites. In the past two years they have found that operating corporate apwtments could be an administrative nightmare. Although they were hoping for relatively long term corporate apartment residents-urea, six or twelve months; in actuality they were 38Allen. p. 1F. 29 allowing stays as short as one or two days. The expenses and upkeep of operating in this way was not profitable. Some progams within the goup we active and profitable but Balcor is not planning to expand the concept. As the corporate apwtments we vacated long term conventional lessees we the preferred replacements. Since vacancy rates in the'r holdngs we now wound three to eigrt per cent the need to attract this specialized resident is not requ'red. Those progams that we successful rely on the'r proximity to commercial or industrial users who relocate employees for temporwy assigrments or training progams that run for extended lengths of time.39 KormanSuites, localized in Philadelphia, had a tifferent experience in the last two years. Since 1988 they have constructed a new buildng as a suite hotel. Korman's involvement showed a trend towwd corporate apwtment residents des'ring as many amenities as provided by hotels. In the'r new buildng they offer overnigrt accommodations as well as the monme rentals with expanded amenities inducing a restatrant, room service, bell boys and doorman. The'r mwket analysis demonstrated the absolute necessity for corporate apwtments but with more services and amenities and they complied.“ For Southmwk Corp. a complete retreat took place. The special assets civision is no longer under the drection of Howwd Hwing and the corporate headquwters is not ptrsuing the corporate apartment concept as they dd under him.“l As before, indvidual managers we performing the task of filling apartments througr any means available. With the knowledge of the corporate apartment concept, the requ'rements of the local market and the vacancy rate managers may pursue residents requiring this service. 3"Telephone interview with Sara Wiabort, Balcor Management Co., by Gail L. Oranchak. 30 November 1990. “Telephone interview with Kathleen Eicholtz-Umani, Director of Sales with KormanSuites. by Gail L. Oranchak. 30 November 1990. “Telephone interview with office of Clark Zimmerman, director of special assets for Southmark Corp., by Gail L. Oranchak, 30 November 1990. 30 CONCLUSION The prospects for the corporate apartment industry we uncertain. What appews to be a gorvth indistry has, for the most pwt, been based upon tuning a negative into a positive. That is, out of the necessity to fill vacant apartments, apwtment managers have stumbled into the corporate apwtment concept. Corporate apwtments as an industry we at a crossroads. Dependng on mwket needs, this temporwy living wrangement may flotrish, at which time support structures will be built up wound it that include standwcizing both the process for pwticipation in the industry and the relationship between providers and clients. The outcome of expansion and formalizing procedxes would be the establishment of a nationwide network connecting the vwious pwticipants for the pupose of sharing information. Lacking any unified, standwdzed methodology, each indusry enrant follows a process of trial and error in getting the'r operation under way. The lack of networking stifles the gowth of the ind.rstry by preventing a corporate user in one wea of the country from being referred by the'r local provider to a provider in another pwt of the country where the temporwy, short-term housing service is reqr'red. What will determine the futtre gowth of corporate apwtments is the level of demand by traditional apwtment renters. One trend that favors the expansion of the corporate apartment industry is the anticipation of "slower population gowth and household formation, combined with mattration of the baby boomers.“ With less people in the 20-24 age bracket and the elderly determined to remain in the'r singe-family homes as long as possible, the tracitional market for apwtments is shrinking. The reduction in demand for apwtments, evidenced by the consistent rise in vacancy rates from a low of around 6.3% in 1981 to 11.4% in 1988 (a 20 year national high) has been met with a damatic slowdown in multifamily development between 1983 and 1989. While the six yew average (between 1983 and 1989) was 553,000 units annually, by 1988 permits had dropped to 407,000. The results of slower construction 31 starts was a dip in the vacancy rates in 1989 to, a still high, 10.6%.‘12 Whether the corporate apartment industry gows, shrinks, or stays the same depends upon two issues: list, will this style of residence be seen as a valuable asset rather than a short term solution; and second, will construction slowdown reduce vacancy rates sufficiently to curtail the need for property managers to experiment with new methods of attracting tenants. Although the multifamily housing industry is currently experiencing a slowdown, accordng to the Real Estate Research Corporation “residential builders we taking the same attitude as office developers faced with overbuilding—they think it's someone else's problem."“3 It is obvious that a adcitional resewch is requ'red to assess this housing style more completely. The problem the resewcher confronts is also the one that the new entrant into the industry encounters-accumulating information about dfferent corporations actively participating in the industry without an established networking system and the reluctance of experienced pwticipants to shwe the'r knowledge with newcomers. Althougr this report has dealt extensively with the procedrres used by current providers, the changing nattre of the service requires continuing input. Areas of this report that need geater study include possible legal issues. financial chwacteristics and societal impacts. In addtion, this report has approached the subject througr the perspective of the provider. There is another side to the story, the corporation using the service and further insight may be obtained from resewching the industry from its purview. Investigation needs to continue and information dsseminated to expand the data base in an effort to understand the effects, implications and management of the corporate apartment. ”Richard Kateley. Emerging hands in Real Estagz 1929, (Chicago: Real Estate Research Corporation. 1990) p.32. 43Kateley, p. 32. 32 BIBLIOGRAPHY Allen, J. Linn. "Apartments Go 'Business Class." Chicagg Tribune, 26 August 1990, Sec.F, p. 1, col. 7. Cwman, Edward C. Jr. and David A. Smith. ”Rental Housing in the 1990's.“ mm WMardr/Aflil. 1966. 139-46-48- Eicholtz-Umani, Kathleen, corporate account executive KormanSuites. Telephone interview by Gail L. Oranchak. 26 May 1988. Eicholtz-Umani, Kathleen, (hector of sales KormanSuites. Telephone interview by Gail L. Oranchak. 30 November 1990. Eldidge, Joyce, vice-president for home-owned properties, Lincoln Properties. Telephone interview by Gail L. Oranchak. 15 April 1988. Hwing, Howard, Southmwk Management Corp. Telephone interview by Gail L. Oranchak. 19 April 1988. Jefferson, ka, corporate apwtment coordnator Tahoe North (Meta Atlanta Properties. Telephone interview by Gail L. Oranchak. 26 May 1988. Kateley, Richwd. Emer ' T ends in e state'1990. Chicago: Real Estate Resewch Corporation, 1990. Mandelbaum, Helene, pr'lment Management Newsletter. Telephone interview by Gail L. Oranchak. 15 June 1988 McGougt, Robert, prtment Owners and Managers Association of America. Telephone interview by Gail L. Oranchak. 15 June 1988. Pierce, Tammy, Institute of Real Estate Management. Telephone interview by Gail L. Oranchak. 15 June 1988. Schultz, Randy, director of Public relations R at B Enterprises. Telephone interview by Gail L. Oranchak 21 April 1988. Sheehan, Robert, economic consultant for the National Apartment Association. Telephone interview by Gail L. Oranchak. 15 June 1988. Smith, Judy, vice-presidentldrector Corporate Lodging. Telephone interview by Gail L. Oranchak. 21 April 1988. 33 Weiner, ka J._, mwketing corporate apwtments lnkeeper Associates. Telephone interview by Gail L. Oranchak. 26 May 1988. Wiebort, Sara, Balcor Management Co. Telephone interview by Gail L. Oranchak. 30 November 1990. Wilkes, Kathleen, Corporate Suites. Telephone interview by Gail L. Oranchak. 24 May 1988. Wright, Bernice, Balcor Suites. Telephone interview by Gail L. Oranchak. 15 June 1988. Zimmerman, Clark, director of special assets Southmwk Corp. Telephone interview with his representative by Gail L. Oranchak, 30 November 1990. 34 NSTATE llllllllllllllll Illlllllllllllllllllllllllllllllll 31293 02656 8778