PMA Bulletin: Key Executive Insights with Toby Bozzuto
September 01, 2014
As published in the PMA Bulletin: http://viewer.zmags.com/publication/e870f33d#/e870f33d/33
In this BULLETIN, we talk with Toby Bozzuto, president of The Bozzuto Group, about apartment buildings of the future, the importance of understanding the Millennial generation, the role of innovation and the need to bring new ideas to the multifamily residential industry. Here, Toby also reveals the formula for success that he learned from his father and explains what he would do if he met with the Dalai Lama. Read on!
What is on Bozzuto’s front burner at the moment?
TB: We look forward to capitalizing on market opportunities and continued growth across all of our business lines. Our ability to stand out as a boutique high-touch management company has allowed us to grow with wonderful clients. By the end of the year, we will have more than 45,000 units under management from Washington D.C. to an increasingly large presence in New York and Boston Concurrently, our construction company continues to grow, as does our development company and our homebuilding company.
We are grateful to be in the Washington, DC region. This is our home, and we have tremendous faith in its future over the long term. Therefore, we aren’t overly concerned with near-term supply/demand aberrations, and think they are largely overstated.
Which of your 2014 objectives poses your biggest challenge?
TB: Equity investors that had previously been interested in Washington over the past few years are expressing concern over potential overbuilding. As such, their potential reticence to invest in projects starting in 2014-15 makes it theoretically more difficult to begin planned projects for some developers. However, we are fortunate that Bozzuto’s equity partners have a much broader, long-term perspective. We will therefore continue to get our deals done. In many ways, we enjoy cycles in our market when some of our competitors are gone as it provides us with more opportunities.
Bozzuto has more than 5,000 rental units under construction. What do residents want in an apartment building of the future?
TB: Class A renters, comprising the Millennial generation, Gen X and some Baby Boomers, want to live in pedestrian-friendly communities where they can walk to public transportation, stores, restaurants and nightlife. Infill living is growing in popularity. Ultimately, I believe they are seeking more than an apartment. They are seeking sanctuary. As such, my company is trying to build projects that resonate with our customers through the use of creative design, place making, and ultimately customer service.
Bozzuto is in the business of creating extraordinary experiences for our customers. As such, we build projects that have some intrinsically special quality to them. Each project has its own identity. This is true both in our urban infill projects, as well as our more-suburban projects. The suburban projects are mostly located in or adjacent to either transit or a walkable town center. Therefore, they are characterized by urban attributes. The ability to walk to a grocery store or service retail is not a desire only held by urban renters.
In affordable housing, the needs and desires of renters are no different than those of residents in market-rate communities. The trends that apply to market-rate rentals are applicable to affordable housing to the extent that developers are able to locate affordable housing projects in similar areas. But as price becomes an issue, it is very difficult to finance affordable projects in urban areas. We believe that it is worth the effort to get projects like these done in addition to our market rate opportunities.
Outside of property management, which companies do you admire the most and look to emulate and why?
TB: I look at companies like Apple that have been incredibly innovative with their products and their ability to predict consumer behavior. Apple showed its customers what they wanted before they even knew they wanted it.
I admire companies like Patagonia that stand by their products. Patagonia has created a lifestyle around their brand and have subsequently made purchasing their goods more about just the good themselves. You are really buying an experience. I think that Under Armour has done the same thing with their tremendous brand.
I also like what Tesla is doing by introducing products that are environmentally friendly and being extremely innovative as well. Tesla is shifting the paradigm of the automobile industry. I am hoping over time my company can do the same within our industry.
Lastly, I admire companies that are doing the right thing for the community – for instance, Toms Shoes. They operate their business in a way that not only encourages profitability, but also focuses on philanthropy as a core mission. Bozzuto recently created a charitable committee made up of wonderful thinkers from different divisions of our company. They will guide Bozzuto leaders about where we should invest not only our dollars, but also our time. At the end of the day, giving back is perhaps the most rewarding thing we can do as a company.
Your father, Tom Bozzuto, is an iconic figure in the development, construction and management business. What have been the most valuable lessons that you have learned from him?
TB: Thank you for saying that. My father taught me to value integrity in the way we do our business and the way that you live your life. He showed me that by doing the right thing you could be very successful.
His influence is behind the values that we use to run our organization. Those values are concern for others, creativity, passion for what we do, and perfection, which is a goal worth achieving..
My father also taught me humility and to be grateful for what we have as a company. I wake up every morning with a tremendous gratitude towards all of our employees and what they accomplish each and every day. I know my father feels the same way.
What has been the greatest challenge in your and Bozzuto’s transition from one generation of leadership to the next?
TB: It’s a little hard to answer. I suppose that anyone who works for a company started by their mother or father would have a shadow of their parent over them. In my instance, it’s a good thing because I respect my father a tremendous amount and appreciate the fact that in many cases his reputation precedes me when I walk into a room. We have been blessed that we haven’t had any significant challenges, and I hope that it will remain that way.
Perhaps more importantly, I have partners that all of whom have been with the company for more than ten years. They are the leaders of their businesses and I am lucky to work with them. Because of them, there is less of a generational shift as we have all been working together for well more than a decade (and in some instances more than 20 years).
Bozzuto has been named one of the best places to work in the DC metro area. What do you do that makes working at Bozzuto special?
TB: I try to figure that out every day so that I can constantly improve our company. I try to determine what we can do better for our employees and what our employees desire. We listen to them and treat them as a large family. I very much consider people at work part of my family, and you treat your family well.
What also makes a difference is that we collectively work on really exciting projects. When everyone believes in what they do, it makes coming to work much more exciting. We all share a passion for what we do, and feel like we are making a real contribution to the communities in which we live. It always feels great to be associated with winners, and that’s exactly what our employees are..
What are the three main areas that property managers need to focus on now and why?
TB: First, they need to understand shifting demographics and how to relate to their customers. Second, understanding the Millennial generation and their desire for individuality is particularly important. Third, managers need to ensure that their communities deliver authenticity to the customer. At Bozzuto, we are trying to create extraordinary experiences for our customers. Through innovation, design or environmental sustainability you can offer something that is unique.
If you could change one thing about your industry, what would it be?
TB: I am trying to change something. Our industry tends to be extremely derivative of its own product. It doesn’t look far enough outside itself for ideas. My company is trying to look to restaurants, hotels, nightclubs and retail establishments for ideas to further enhance our product design. Furthermore, we are increasingly interested in how we can incorporate wellness into our projects in everything from the materials we use to the activities we offer our residents.
As an industry, we have a propensity to do the same thing over and over again. Bozzuto is trying to break free from that trend. Some other developers do interesting things as well, but this is certainly what we are striving for.
What do you do for fun?
TB: Spending time with my family. My wife and I have three children and I really enjoy spending time with them. I also like listening to music and going to live music performances as often as possible. I believe strongly that the arts are a crucial part of life. I love reading as well, especially fiction. I am a junky for information, and literally devour anything I can get my hands on. We work so hard during the day that it’s nice to escape to a wonderful world of fiction. I also read a lot of books on spirituality and religion that provide a better understanding from many different perspectives.
If you could invite anyone to dinner living or dead, who would it be?
TB: The Dalai Lama. He is the epitomization of kindness, compassion and intelligence. I would be fascinated to have the opportunity to speak with him. In fact, I would just listen.