While the home sales market may still be struggling to recover from the crash of five years ago, the rental industry is flourishing, and at the center of the boom is Thomas S. Bozzuto.
Bozzuto, 65, is chairman and CEO of the Bozzuto Group, a privately held integrated real estate services organization that generates about $1 billion in annual revenues. Spread over six companies, the Greenbelt enterprise comprises management, homebuilding, construction, development, acquisitions and land.
The group’s diversity makes it especially suited to take advantage of the growing rental industry. Developers broke ground on more than 14,000 class A apartment units in the Washington, D.C., and Baltimore metropolitan region from June 2011 to this past June, with work on 11,000 more units expected to start during the next year, according to a survey from Delta Associates of Washington, which monitors the rental industry. The survey was done on the behest of the Bozzuto Group. The Maryland suburban market of the Washington region accounts for 30 percent of the region’s units.
Nationally, the apartment industry represents a $2 trillion market, according to the National Multi Housing Council — the 1,000-member trade group that Bozzuto chairs through next year.
“Tom brings a wealth of business experience to the Council,” Doug Bibby, president of the council, wrote in an email to The Gazette.
Bibby said he spends time with many senior industry executives and the Bozzuto companies are “superbly managed and run, and it is a highly desired working environment for multifamily professionals.”
“In short, no one leaves,” Bibby said. “That is a testimony to Tom’s leadership and the collaborative way he manages his relationships with fellow employees and customers alike.”
The appeal of the rental industry
This week, Bozzuto and council members were in Washington to press federal officials and lawmakers for help: credit support for the industry, a tax code that supports for investment in rental housing without causing undue burdens and caution regarding regulatory burdens.
“My impression is that the association is increasingly effective in getting the message across that apartment life is a viable choice,” Bozzuto said. “More people are choosing to rent, even if they have the resources to buy. It’s one of the few positive byproducts of the recession.”
More than one-third of all Americans rent their home, a 15-year high, while home ownership has reached a 15-year low, according to the council. This growth is expected to continue as Generation Y’ers age out of their parents’ homes or roommate housing and look for flexible housing for work, according to Delta Associates.
To help meet the growing demand, the Bozzuto Group, among other projects, recently started a 500-unit apartment complex in its Downtown Crown development in Gaithersburg, with the assistance from Northwestern Mutual of Milwaukee.
But the company also focuses on sales, and it’s seeing a revival there, too.
“We’re in the middle of our best year ever,” Bozzuto said. “Our home sales by the end of August were as many as we had sold in the whole of last year.”
‘A remarkable guy’
Many attribute the Bozzuto Group’s continued success, especially its ability to position itself for the best opportunities, to its CEO’s foresight.
“I remember speaking to him when the economy was going down. And almost as it was happening, Tom said it was all going to move toward multi-rental,” said Rick Berndt, a managing partner with Gallagher, Evelius & Jones, a Baltimore law firm.
Berndt’s firm has worked with the Bozzuto Group on such Baltimore projects as the award-winning Fitzgerald at UB Midtown, a mixed-use development with 275 apartments; Spinnaker Bay with its 315 apartment units; and Union Wharf with 281 apartment units.
“Tom Bozzuto is a remarkable guy. He’s seen the ups and downs of the industry and picked his course and steered toward it,” Berndt said. “All his partners have benefited.”
Bozzuto also conveys confidence in everything he does, he said.
“The world could be going to hell, and Tom would find something positive that’s happening now or will happen,” Berndt said.
‘An impact that would outlast me’
Bozzuto began his company in 1988, along with COO Richard L. Mostyn and President John B. Slidell. He joked that they started the business with the goal of “eating.”
“I always wanted to do something that would have an impact that would outlast me,” Bozzuto said. “We build around the notion of actually doing what we said we were going to do.”
To date, the Bozzuto Group, with more than 1,200 employees, has built more than 35,000 homes and apartments and manages more than 32,000 apartments in a market that reaches from Northern Virginia to Boston.
“More importantly than all of that, the company gives the opportunity to do good while doing well,” he said.
Bozzuto also spent 13 years as a mid-Atlantic regional partner at Oxford Development and worked for the James W. Rouse Mortgage Co. He honed his public policy knowledge was serving for the U.S. Department of Housing and Urban Development.
“He’s seen a large, national business get beyond itself and learned a lot from that,” Berndt said.
“What makes him so good is that he is able to move quickly with the times,” said Ronald Creamer, a private investor with Bozzuto, adding that Bozzuto is perceptive as to where the market is moving. “He has a full-scale organization so he can move between sectors.”
Creamer, formerly with Weinberg & Green of Baltimore, has been partners with the Bozzuto Group for 20 years. Before making that move, Creamer said, he spent two years investigating potential real estate partners.
“I saw Tom as the best. I called him up and said, ‘Let’s get married. I want to be partners,’” Creamer said.
He also praised Bozzuto’s honestly, saying that, unlike other people he has worked with, Bozzuto does not hide when he has problems and seeks to immediately fix them.
“I’ve not seen anybody else in real estate with the vision and perspicacity he has,” Creamer said.
A community-minded business leader
To Howard County Executive Kenneth Ulman (D), who has known Bozzuto since Ulman was a county council member, Bozzuto is a “community-minded business leader.”
“He has an understanding of the community’s needs and how huge projects fit into the neighborhood and help improve the area and the jurisdiction,” Ulman said, adding that Bozzuto will want to know how pedestrian connections work or how a project fits into the county’s vision.
While a lot of companies may bring “pretty pictures” before the project is complete, the Bozzuto Group delivers something that is “as pretty if not nicer,” he said.
“His view is if you do it right, you will make money but also improve the community,” Ulman said. “He really has a long-term vision.”
Bozzuto’s Shipley’s Grant, a 390-townhome mixed-use development in Columbia, has been one of the best-selling properties in Howard County for two years, Bozzuto said. The project was started in 2006.
Into the future
The Bozzuto Group also is readying for a $89 million condominium project at National Harbor in Oxon Hill. National Harbor’s owner, the Peterson Cos. of Fairfax, Va., will help develop the project this year.
And Bozzuto does not plan to slow down anytime soon, even though he named his son Toby president of Bozzuto Development in 2009.
“I’m not retiring. None of us are leaving anytime soon. The nature of what I do every day changes for year to year, as Toby and the others take on more responsibility,” Bozzuto said.
The Bozzuto Group has always viewed nepotism as an asset, he said, as both Slidell and Mostyn also have children working in the company.
“We’ve been recognized by industry peers, investors and employees as a group of people who do what we say we’re going to do: make the community a better place to live,” he said.