Steven DeFrancis of Cortland: “Developers can still play a key role in several ways”

Regardless of whether people rent by necessity or choice, it’s important we’re not just focused on the space, but even more so the ways our future residents live and create a home in that space. In a world where consumer interactions are highly digital and increasingly personalized, that means home technology is front and center […]

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Regardless of whether people rent by necessity or choice, it’s important we’re not just focused on the space, but even more so the ways our future residents live and create a home in that space. In a world where consumer interactions are highly digital and increasingly personalized, that means home technology is front and center of building trend conversations. But the conversation around tech isn’t just about convenience or the newest smart home gadget. It’s also about privacy and choice. We need to provide options for our residents to securely engage with us and their living experience in the manner they choose.

As a part of our series about “Homes Of The Future”, I had the pleasure of interviewing Steven DeFrancis.

Steven DeFrancis is the founder and CEO of Cortland. He has more than 25 years of experience in complex multifamily development and management, specializing in unique development and value-add opportunities. Since its founding in 2005, Cortland has expanded into a global, vertically integrated, multifamily real estate investment, development, and asset management company. Anchored on providing a beautiful, yet affordable living environment and an enriched lifestyle to its residents, the company has adopted the unique approach of internalizing the majority of the functions dedicated to achieving those two objectives — from construction and design to product development.

Steven and his team manage a portfolio of multifamily assets located in eleven states, primarily throughout the Southeast, Midwest, and Texas. Internationally, Cortland maintains a global materials sourcing office in Shanghai and a development and management platform in the UK. The company employs more than 2,000 associates and owns and manages more than 60,000 apartment homes. Cortland is a National Multifamily Housing Council (NMHC) Top 50 Owner and Manager and is ranked as the Top US Brand by (2020 Property Management Reputation Report).

Steven earned his bachelor’s degree in Real Estate from The University of Georgia’s Terry College of Business. He is a member of The Buckhead Coalition and serves on the board of the Atlanta Neighborhood Development Partnership. He is also a member of The Real Estate Roundtable, The Urban Land Institute, and the National Multifamily Housing Council.

Thank you so much for doing this with us! Before we dig in, our readers would like to get to know you a bit more. None of us are able to achieve success without some help along the way. Is there a particular person to whom you are grateful who helped get you to where you are? Can you share a story about that?

The reality, at least in my experience, is that there isn’t really any one person who helps author a good success story — rather it’s the collection of thousands of people over time who have contributed in any number of ways, big and small, positive and negative. I will say, though, that the most impactful influences have been the negative interactions. In most cases, they led to a lesson that needed to be learned or a heightened determination to make our vision work despite the naysayers along the way.

Are you able to identify a “tipping point” in your career when you started to see success? Did you start doing anything different? Are there takeaways or lessons that others can learn from that?

The most significant “tipping point” for me was about 10 years ago as we were coming out of the 2008 economic downturn. When I founded Cortland in 2005, we were a small, development firm focused on in-town apartment housing in Atlanta. During the downturn, we realized we needed to shift our focus from developing apartment communities and having an investment-only strategy to acquiring and renovating communities. Through this strategic pivot, we saw an opportunity to challenge the conventions of the traditional apartment industry and be a company with an intentional focus on the people we provide homes to — and not just the investor. So we steadily started to bring the primary functions that contribute to the apartment living experience — construction, property management and interior design — in house.

This integrated approach put us on a trajectory that has since resulted in us becoming one of the largest apartment owners and operators in the country with a vision to be the brand renters search for when looking for their next home. We wouldn’t be where we are today with the vision we have if we hadn’t been willing 10 years ago to take the risk of completely transforming our entire strategy. The greatest lesson that came out of that decision was the importance of being willing to admit when something isn’t working and risk the failure of trying something new. It wasn’t easy, and we’ve certainly made mistakes along the way. But out of failure comes great opportunity. And for us, that was an opportunity to have a greater impact on the lives of the people who choose to come home to a Cortland community each day.

OK super. Let’s now shift to the main part of our discussion. Homebuilding in the U.S. has grown tremendously. We’d love to hear about some of the new trends and techniques that are being used to build the homes of the future.

As an apartment home provider, our goal is to stay at the forefront of what renters are looking for in their home and living experience. Historically, the apartment industry has been regarded as a commodity offering, and therefore every aspect of the industry was treated as such — from product and amenities to renters and employees. As a result, this industry has lagged behind other consumer and service-oriented industries when it comes to focusing beyond brick-and-mortar and prioritizing the customer. We’ve now entered an age where apartment living is seen as a consumer offering, which is a paradigm shift in how the entire industry thinks, and in turn, how it is perceived.

Regardless of whether people rent by necessity or choice, it’s important we’re not just focused on the space, but even more so the ways our future residents live and create a home in that space. In a world where consumer interactions are highly digital and increasingly personalized, that means home technology is front and center of building trend conversations. But the conversation around tech isn’t just about convenience or the newest smart home gadget. It’s also about privacy and choice. We need to provide options for our residents to securely engage with us and their living experience in the manner they choose.

Design, cost and sustainability are the other three factors shaping building trends. As we look to Gen Z, we know they are enterprising, frugal-minded and environmentally conscious. So as more of this generation moves out and likely starts to rent (not buy) their next home, the way we build for the future needs to be focused on them and their priorities — from the way we design our homes to the way we justify what we ask them to pay in rent.

Can you share with us a few of the methods that are being used to make homes more sustainable and more water and energy efficient?

The commercial residential real estate sector has had this conversation for a while now, and we see the latest trends in sustainable design and construction center around enhanced building methods, like modular construction, and additional energy efficiency opportunities, even within traditional building practices.

Energy efficiency, coupled with sustainability, is increasingly becoming the focal point of our new projects. A few primary methods we’re focused on are tighter building envelope systems, LED lighting, energy-efficient appliances, and energy commissioning and performance testing at the culmination of our projects.

In terms of enhanced building methods, we’ve been exploring the world of modular construction like many others. However, the challenge there is it’s still such a niche approach in the U.S., which makes it an expensive solution. If the industry would embrace modular construction more, we’d see greater efficiencies in those building practices, which would bring the cost down and make this a more viable solution to energy and sustainability concerns related to apartment home construction.

There is a lot of talk about Smart Homes. Can you tell our readers a bit about what that is, what that looks like, and how that might help people?

Smart technology in apartments doesn’t differ that much from houses — it’s just a matter of scale. A few years ago, smart thermostats were a no-brainer for us. Enabling our residents to better control the temperature in their homes helps them with their utility bills while helping us mitigate issues related to humidity, etc. Smart locks are another feature that, despite the significant upfront cost to install them, can save a lot long-term when it comes to the cost of changing locks when residents move out. They also prevent having to dispatch a person when a resident gets locked out of their home. These are savings we can give back to the resident when it comes to the overall cost of renting an apartment. Above all, we want to make sure anything we consider putting into our homes is something meaningful for the resident — does it save money, make their life easier, enhance sustainability, etc.?

We also have to anticipate how quickly technology changes, especially when outfitting an apartment community that has 300 to 500 homes. So our focus is primarily on connectivity and equipping our buildings to seamlessly handle the technology our residents choose to use versus imposing features on them that might not integrate with the technology they prefer or might be obsolete in a few years. We have to make wise technology decisions that can stand the test of time. Therefore, we generally look for solutions that can be updated through software rather than hardware changes. For example, think Tesla and how its cars can get updated features without having to change the physical car.

Aside from Smart Homes, can you talk about other interesting tech innovations that are being incorporated into homes today?

An interesting innovation for us is the evolution of predictive maintenance technology. For example, you can place sensors on air conditioning and heating units that can alert our service teams to a potential issue or upcoming repair need before it actually becomes an issue for the resident. That’s valuable technology for us, not just from a cost perspective, but especially from a customer service standpoint. If we can prevent an issue before it becomes one, or at least be able to fix an issue faster, then that’s just another way we can anticipate our residents’ needs and give them more time to focus more on living their lives.

Can you talk about innovations that are being made to make homes more pet friendly?

One of the amenities we’ve started seeing more in newer apartment communities is a pet washing station or room equipped with everything you need to bathe your pet without having to pay for a groomer or upend your bathroom. Cortland’s apartment communities have always had dog parks and leash-free areas for pets. But even those get more attention with new features, like obstacle course-like play areas. We’ve also seen an increase in pet care and dog-walking offerings specific to the apartment industry. And many apartment owners — us included — have been exploring ways to offer those services through partnerships at a discount to residents.

How about actual construction materials? Are there new trends in certain materials to address changes in the climate, fires, floods, and hurricanes?

There’s certainly an increasing amount of research and investment, particularly by insurers, into how we make buildings more durable in the face of extreme weather and disaster-related events. There are myriad ways — from materials to landscaping — of making buildings more resistant to fire, hail, wind, etc. And I think the discoveries that come out of this research will only continue to inform building practices and push the industry to develop new materials and design standards to be more weather-resistant. In addition, many of the advances on the energy efficiency front will likely inform these trends.

For someone looking to invest in the real estate industry, are there exciting growth opportunities that you think people should look at more carefully?

Despite our current circumstances and the near-term economic outlook, multifamily is still a strong sector, and increasingly so in suburban areas. U.S. housing is still undersupplied, and we see household formations are likely to be the primary driver for multifamily growth going forward. Multifamily occupancy are still at a high, and that continues to be fueled in part by the ways millennial have delayed more traditional life-stage events, like having kids, purchasing a house, etc. We’re interested in how apartment living continues to evolve as a result — and we anticipate more demand for larger apartment homes or more townhome-style rentals as the single millennials, and eventually Gen Zers, of today become the families of tomorrow. As renting continues to be the leading housing choice for these generations, either as a preference or necessity, providing more family-friendly housing options will likely be a necessity.

Let’s talk a bit about housing availability and affordable housing. Homelessness has been a problem for a long time in the United States. But it seems that it has gotten a lot worse over the past five years, particularly in the large cities, such as Los Angeles, New York, Seattle, and San Francisco. Can you explain to our readers what brought us to this place? Where did this crisis come from?

The affordability issue today is not a complex one, but it’s a conversation that needs to be contextualized and reshaped. There’s no doubt, especially under current circumstances, the housing burden needs to be lessened. If you are someone who is housing-burdened, every dollar spent on having a roof over your head is a dollar you don’t have to spend on healthcare or other bills or to put back into the economy.

However, developers and landlords are not the culprits, despite public perception. Construction and labor costs aside, the issue is rooted primarily in housing supply and zoning regulations.

The U.S. is undersupplied in housing and has been for a while — so we have a supply issue creating an affordability issue, and at the heart of it all is zoning regulation. Zoning is by far the strongest tool in the hands of local governments when it comes to affecting housing supply and therefore addressing affordability. That said, lawmakers are up against a pervasive culture of NIMBYism and historic stigma toward densification and development, which is frankly what zoning laws are founded on.

There’s an irony that the cities with the most progressive governments and pro-housing policies actually have the worst housing crises. There is a lot of housing demand in those economically vibrant metro areas, but policymakers have not reacted quickly enough by amending zoning policies to allow housing supply to move in tandem with demand. They won’t grant permission to developers to build more housing mostly because they, and/or their constituents, say they want more affordable housing but only as long as they can’t see it from their house. It’s a classic “do as I say and not as I do” issue coupled with an outright failure to respect market forces. This issue has just compounded over time, accentuating pre-existing national problems and disproportionately affecting lower-income households, hence the national conversation.

At the end of the day, the housing industry wants to deliver affordability — providing homes and quality living experiences to people is what we do. But zoning restrictions drive up costs and create a level of risk and unpredictability for developers. If we outlawed or restricted current zoning laws, rents go down, the risk to developers decreases and there is timeline predictability — all of which is worth a ton to the investors funding these projects. The problem will only be fixed when jurisdictions and elected leaders start to address affordability in ways they can control, like their own zoning policies.

Is there anything that home builders can do to further help address these problems?

Developers can still play a key role in several ways — from the projects they explore to how they approach their underwriting and operational expenses over time. We see a lot of value in exploring more transit-oriented developments or locations that can help minimize residents’ expenses related to commuting and transportation. We also think there are some intriguing opportunities in the adaptive reuse space — like turning a hotel into an apartment community. But again, there will need to be more significant strides in regulation and the perception of apartment housing before those become more impactful solutions to the affordability issue.

How can our readers follow you online?

You can find me on LinkedIn or on Twitter @DefrancisSteven. You can also follow Cortland on social media and check us out at

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