Weekend Interview: The Connor Group's Brock Wright On The Multifamily Flight To Quality

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The multifamily market has been on a rollercoaster the last three years, as interest rates and construction material costs soared while buyer appetite declined. But one firm found a way to cut through the challenges by buying properties and expanding into new markets, Denver among them. 

The Connor Group, an Ohio-based multifamily investment firm, owns $5B of assets in 18 markets, primarily across the eastern U.S. Its recent purchases include the 326-unit Olivine in Littleton, Colorado, the 314-unit Alcove at Birkdale Village in Charlotte, and the 322-unit Carmel Center in Indianapolis. 

Newly promoted Chief Investment Officer Brock Wright told Bisnow these acquisitions fit within the firm’s long-term growth goals because they are located in hot submarkets that have seen consistent rent growth over the years. 

“We really focus on avoiding buying in areas that are going to be oversupplied because when you’re surrounded by a bunch of new apartments, you’re going to struggle to increase rents the way you project,” Wright said.  

This interview has been edited for length and clarity. 

Bisnow: What’s your strategy concerning apartment purchases considering multifamily is expected to soften this year?

Wright: In any market condition, there will be certain opportunities to buy specific apartments. And we’ve stayed really active on the buy side over the last 18 months or so. In the back half of 2022, we purchased eight properties, and then another eight in 2023. 

Our mindset through all of this was to be selectively aggressive rather than remove ourselves from the market entirely. One of the things that differentiates our firm is that we view apartments as a very active investment, and by being great operators, we are able to continue to deliver exceptional returns to investors during any part of the cycle.

Bisnow: What’s your take on the 2024 multifamily market?

Wright: I think transaction volumes are going to increase year-over-year, but I don’t think it will resemble a normal year, in part because of the volatilities we’re experiencing today. We haven’t yet seen the institutional players get back into the market, and I don’t think we do until there is stability in interest rates. Some factors that could continue to create volatility is a growing federal deficit that will impact treasury supply, the potential impact of a massive wall of office debt maturities, there are now wars in Gaza and Ukraine, and it’s an election year, which typically pauses things a little bit.

That being said, we think there are going to be some really good buying opportunities. Last year was the first year since 2009 that The Connor Group did not sell one of our properties. The market will likely rebound during the back half of 2024 where we could see prices that are reasonable enough to where it makes sense to sell a couple of properties. 

Bisnow: Some 500,000 multifamily units are expected to come online this year. How do you plan to maintain rent levels given the market and given the supply coming online? How do you expect to navigate? 

Wright: This is where I feel grateful that I work for Larry [Connor], who has been doing this for more than 32 years. One of the key criteria we look at before buying a property is whether there is more demand for apartments in a given market than there is supply. The Broadstone Olivine in Littleton is a great example of this. Littleton is pretty stringent about their requirements for rezoning and multifamily properties, so there is relatively little competition there compared to Denver. We really try to avoid being on “apartment row,” and our micro focus helps us avoid those oversupplied markets. 

Bisnow: How do you decide which markets to invest in? Do you look for any data outside of income, job and population growth?

Wright: One of the things that sets our firm apart from the competition is that we pay attention to the micro factors more than macro factors like [consumer price index] or nationwide job growth. We keep our eye on that data, but it doesn’t really inform our market-specific investing decisions. 

When we evaluate new markets to enter, one aspect we focus on is whether we can see ourselves buying at least one property per year in a market. Denver is one market that is certainly big enough from a transaction standpoint. There are investors and developers of all shapes and sizes here. We also want to see about three to five submarkets where there’s a high barrier to entry, like Littleton, for example, because they help protect our investment. 

Bisnow: What makes the Denver market so attractive for multifamily investors?

Wright: There’s a lot to like about Denver. There are strong fundamentals in the form of high-paying jobs. There’s a large tech and medical presence, which we pay attention to. The universities also provide a strong employment base and a great labor pool. It’s also a great place to live, and a lot of people have moved to Denver because of the outdoorsy lifestyle. We think these factors are going to bring more jobs and growth to Denver in the near future. 

Bisnow: Tell me a little bit about how The Connor Group came up with its 15-year horizon to invest in new markets. How does this strategy improve returns for your investors?

Wright: Larry came up with the 15-year horizon before I joined the company, but I can comment on it. There’s a lot of research that goes into making the decision to enter a new market. You have to go there, look at the data, understand the different submarkets and their dynamics. And that’s a significant undertaking in itself. 

It also takes a lot of effort to redeploy our people to a given market where we plan to scale to four, five or six properties at a time. But this is how we implement our culture. We don't look at our apartments as a passive investment. We're buying $90M to $100M businesses with the intent to improve the customer service, improve the bottom line and to sell them for a profit.

Bisnow: Everyone is talking about the flight to quality. What does that mean or look like in the multifamily space? Can you give a couple of examples?

Wright: If you ask three people this question, you’ll probably get three different answers. In a broad sense, what it means is that investors who have been sitting on the sidelines because of the market volatility are going to come back and buy what’s perceived as a “safer” asset. That typically means a property is in an A or A-plus location. Historically, investors have paid premiums for properties in these locations. When the market was the hottest, the premium for quality vs. other assets was little to none. Now, as investors look to reenter the market, they will do so in a “flight to quality”.

I think the Broadstone Olivine in Littleton is a good example of what we’re talking about here. As investors look to reenter the market as buyers, they will look to do so in quality assets and locations like this.

Bisnow: Give us a bold prediction for the rest of the year.

Wright: I placed a bet on the Kentucky Wildcats basketball team to win the national championship this year. Given our track record over the last six seasons, I think that’s pretty bold. 

Bisnow: What is your weekend routine or favorite weekend activity?

Wright: My wife and I have two young boys aged 3 and 6, and we have a fall routine where we take the kids to a Kentucky football game. I think we’ve escaped the “survival mode” of bringing two youngsters to the game and have gotten to the point where it’s a lot of fun. That’s what we’re usually doing on Saturdays.

CORRECTION, Jan. 13, 2:00 P.M. ET: A previous version of this story misstated figures relating to The Connor Group's portfolio size. Context was also added to clarify some of Wright's answers. The story has been updated.