Sean O’Leary is president of the Rhode Island Apartment Association and vice president of development at Pawtucket-based Ferland Corp., which manages more than 3,000 apartments in Rhode Island. O’Leary recently took some time to speak with Providence Business News about the apartment market and his plans as president of the association, which has approximately 70 members that manage or own about 17,000 apartment units in Rhode Island.
PBN: The Center for Housing Policy recently released its annual report, which said renting an apartment was out of reach for many in Rhode Island. What are your thoughts on the report?
O’LEARY: The figures contained in the report, which are certainly cause for concern, appear to be part of broader economic issues. Specifically, owners of many apartment homes have witnessed an exodus of tenants who can no longer afford to make rent payments due to job loss or reduction in compensation. To combat the alarming prospect of vacant units, some owners have reduced rental rents.
Unfortunately, many owners of Rhode Island apartment homes cannot afford to reduce rents, lest they fail to meet increasing expenses. The most notable of these expenses is the property tax on multi-family-residences, which continue to be taxed at a disproportionately higher rate than single-family homes. We would like to see a more balanced housing policy which accounts for the importance of apartment homes in the community-development toolbox.
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PBN: Can you tell us a little about how the March floods affected apartment owners and their residents?
O’LEARY:There was a very direct correlation between the impact felt by apartment owners/residents and the location of the apartment buildings. For example, the damage to certain apartment buildings in the Cranston, Warwick and West Warwick areas was devastating.
By contrast, buildings located on higher ground and/or far from the cresting rivers reported comparatively little damage. Overall, however, the apartment industry sustained heavy losses, including thousands of displaced individuals and families, irreparably damaged property and personal items, and extraordinary financial costs. In any event, the call to help all affected persons and companies was both impressive and heartening.
PBN: The flooding came during an already difficult economy. What has been the impact of the economy on apartments in Rhode Island?
O’LEARY: As mentioned, many apartment owners are experiencing greater challenges in maintaining profitability. Still other apartment owners, who would like to upgrade their units and buildings, find that the requisite financing to undertake the desired capital projects is unavailable.
These apartment owners, left in some cases with a relatively dated product, are losing residents to many newer properties, including converted condominiums and lofts, constructed during the recent housing bubble. The ultimate fallout of this development over-saturation still remains to be seen. One prevailing constant in the apartment industry over the past 20 months seems to be an unusually high tenant-turnover.
PBN: What has been the response from apartment owners?
O’LEARY: Like any challenging time, this sluggish economy has provided an opportunity for – and in several instances, compelled – apartment owners to reinvent the way that they do business. The result has been, in our opinion, elevated standards in rental communities. In addition, many owners have instituted special programs or deals to attract residents.
One of the great benefits of the relative smallness of Rhode Island is that many owners/managers of apartments are mutually acquainted – in several cases through their membership in the Rhode Island Apartment Association. Accordingly, the association has been able to draw upon experiences of all of its members statewide to attempt to report back on what is working (or what is not working) for some owners/managers.
PBN: Can you tell us about any goals or initiatives you have planned for your term as president?
O’LEARY: Generally, our current Board of Directors would like to ensure that all Rhode Islanders with an interest in the apartment industry are aware of the many benefits of the Rhode Island Apartment Association. In particular, we are very much interested in raising the educational profile of the association among the public consciousness. To this end, we have many seminars and trainings planned over the next several months. Some topics include preventative maintenance, procurement of general-liability insurance, lead-safe work practices, property-tax abatement and leasing.
The Rhode Island Apartment Association also endeavors to provide the forum in which many industry professionals – including multi-family-complex owners, vendors, suppliers, management companies and independent rental owners – come together to benefit their businesses. A good example of this networking is our July trade show for vendors and suppliers.
Lastly, we would like to take advantage of our affiliation with the National Apartment Association (located in Washington, D.C.) in helping Rhode Island to emerge as quickly as possible from our current housing situation.
