Kristi Nootens, managing director and co-head at CP Capital US

Q&A with Kristi Nootens: Women Can Break Down Barriers in the Industry

by Channing Hamilton

Kristi Nootens, managing director and co-head at CP Capital US, a real estate manager specializing in multifamily investments, sat down with Multifamily Affordable Housing Business (MAHB) to discuss the role of women in the industry and how the market may develop as we progress into the second half of 2023.

On Women in Real Estate

MAHB: Tell us about yourself and your journey.

Nootens: My journey to commercial real estate started in large part because both of my parents worked in the industry. My dad was a mechanical engineer who spent a lot of his career working for large commercial REITs, and my mom was in commercial property management. I grew up hearing them talk about work at the dinner table, and I became interested in how many different careers and opportunities there were in the industry.

After obtaining my undergraduate degree from Virginia Tech, I worked in property management with Boston Properties in Northern Virginia managing mixed-use developments. Boston Properties was also developing almost one million square feet of retail and office right across the street, so I took the opportunity to learn as much as I could from the development associates, in-house leasing brokers and asset managers.

After a few years, I went back to school to obtain my MBA and attended the University of North Carolina-Chapel Hill, where I concentrated in real estate development and finance. At the time, I wanted to work in development.

After my first year at UNC, I interned with a large national multifamily developer. It was during my time there that I realized that while I loved the idea of creating new places for people to live, I didn’t like being limited to one geographical market, nor did I have the patience for taking deals through the long and often grueling design and entitlement processes. So, in my second year of business school, I switched my focus to the private equity side of real estate. I was lucky enough to keep in touch with a guest lecturer who spoke in one of my graduate courses and who worked at CP Capital. When I was graduating, a job opened up on their investment team. I’ve been at the firm now for almost 11 years.

MAHB: What do you like about commercial estate from a career perspective? What gives you satisfaction? What challenges inspire you to keep going higher?

Nootens: One of the things that first interested me about real estate and still interests me today is that there are so many different facets to the industry. From a career perspective, you can go into debt or equity, property management, asset management, acquisitions, development or brokerage — there are so many different opportunities. And within almost every one of those, you can concentrate on a specific location or asset type. There’s a lot of crossover in skill types and knowledge, so it can be fairly easy to move around within the industry.

Something that gives me the most satisfaction is the opportunity to work with a wide variety of people. Real estate is a very social career. Whether you’re working in property management, development, or with contractors and municipalities, it’s all about forming strong relationships. I love being able to collaborate with different professionals and learn something new almost every single day. That really keeps me going.

MAHB: Can you share a few details from some of the most impactful growth experiences you had in the industry on your way up? Moments of inspiration that made you want to keep pursuing this business? What makes you feel passionately about what you do?

Nootens: I’ve always been inspired by the women I meet who have leadership roles in the industry. One woman who really inspired me on my journey was the co-founder of CP Capital. She had a huge impact on me when I first started at the company more than 10 years ago as an analyst on the investment team. 

She had a strong personality, was an exceptional leader and was extremely well-respected by everyone in the community and at the company. She unfortunately passed away several years ago, but her leadership style left a big impact on me, not to mention on the company as a whole. I often ask myself, “What would Karin do?”

As for inspiring moments — the best example was when I first became vice president of the investment team and led my first deal from start to close. That was one of my proudest moments. It cemented my love for my job and confirmed to me that I’m going to be in this industry for the long term. 

MAHB: Are women still, for the most part, minorities in top leadership in investment and development firms? 

Nootens: The real estate industry still has a reputation for being a bit of a boys’ club, and women are still largely in the minority.  Although there are certain parts of the industry that tend to employ more women, the investment and development side of the industry is still very male-dominated, especially in senior roles.

It’s important for women in the industry to advocate for their peers and promote these types of jobs to women in the younger generation so they know it’s a viable career option. Another thing that could bring more women into the more quantitative finance sides of the industry is outreach from colleges and graduate programs that are offering real estate-specific concentrations and therefore attracting more women who are still in school or early in their careers.

MAHB: Do you think the industry could do more to evolve with the times?

Nootens: We’re getting there. There are several industry organizations and events that focus solely on women, and it’s always great to see them highly attended, especially by women in powerful leadership positions.

Beyond that, however, I think part of the solution is educating men in the industry about the issue and making sure they’re aware. Personally, I’ve noticed that some of the networking events — golf outings, sports games — tend to be traditionally masculine. I love going to these types of events but notice there is sometimes an assumption that women aren’t interested, which is unfortunate.

Overall, women who are in positions of leadership and power are going to be tasked the most with making sure that we’re opening doors for women in the younger generation.

On The State of the Industry

MAHB: Occupancies are creeping down and rent growth is slowing. Do you think, long-term, there is still healthy renter demand and a shortage of available housing?

Nootens: Absolutely. If you compare any metric in multifamily today to 2021, it’s going to look like there’s been a huge falloff, but that’s mostly due to the unsustainable highs we saw that year. In reality, multifamily fundamentals are simply returning to historical averages. In the long run, there is a massive, fundamental housing shortage in the U.S., which is projected to reach a deficit of four million housing units by 2035. That supply-demand imbalance is not going away anytime soon and will lead to strong, stable multifamily fundamentals in the long term.

MAHB: Are millennials and Gen Z opting to rent instead of buy? Why might that be?

Nootens: On one hand, it’s desirable and convenient to rent an apartment. When you’re renting, you might have access to a resort-style pool, you don’t have to pay for a gym membership and you don’t have to upkeep your own appliances or do your own yard work. Renting also offers the flexibility to move around to explore different local neighborhoods or new cities.

On the other hand, there are a lot of people who are renting not by choice, but out of necessity. Many Americans simply cannot afford the down payment on the current median price of a home. On top of this, the average cost of homeownership on a monthly basis is the highest it’s ever been due to historically high home prices and the rise in interest rates. So, even if you can afford the down payment, it’s still much cheaper to rent on a monthly basis. I think that renters by necessity are going to be in the renter pool for a long time, exacerbated by the housing shortage that’s expected to continue for the foreseeable future.

MAHB: What are any potential short-term effects of this inflationary and high-interest period we’re in? Transaction is down — how long will bearish hold periods go on if investors do not have to sell? 

Nootens: It’s definitely having an impact. With interest rates being so high and with continued uncertainty around when they’re going to stop increasing, the transaction market has been on a bit of a pause for the past nine months or so. The general consensus is that once interest rates plateau, buyers will have a much clearer picture of how to underwrite deals, senior lenders will become more active, and that will open the door back up for transactions on desirable asset classes like multifamily to really come back in earnest. Then, once interest rates start going down, the transaction market will really bounce back. We’re hoping to start seeing interest rates plateau in the first half of next year.

MAHB: How will CP Capital make strategy adjustments now that performance has changed so much following the double-digit rent growth, rapid development and busy transaction scene of 2021?

Nootens: We’re not making any major strategy adjustments. We are a long-term believer in the strength and resiliency of suburban multifamily product in growing and/or undersupplied markets. As far as the change in performance following 2021, we knew the huge rent growth numbers and sale prices weren’t sustainable, so in any deal that we were looking at, we weren’t basing our underwriting on those unusually high stats. For example, even when rent growth was 15 to 20 percent year-over-year in some markets, we were still underwriting three to four percent. The same went for occupancy and vacancy rates — we were underwriting stabilized occupancy around the historic norm of 94 or 95 percent rather than remaining at 98 percent. 

MAHB: What is the long-term prospectus on the Sun Belt markets? Investment sales experts continuously site in-migration and jobs as the key factors fueling apartment demand for a long time. Is everyone really moving south in droves and will this last?

Nootens: Sun Belt states have been the darling of multifamily for a while, and I expect that trend to continue. Just looking at the past few years, COVID-19 spurred a mass migration to Sun Belt markets. These states have good weather, lower cost of living, and a great quality of life.

Areas in the South and Southeast have continued to experience positive job growth since the pandemic — they’re more business and tax-friendly and just simply desirable places to live from a quality-of-life perspective. While it’s not going to continue at the same pace it has over the past three years, I think we will continue to see a good amount of growth in these markets.

MAHB: What types of interesting or unusual trends are ahead from a development standpoint? How is the product type branching out from the classic garden-style or high-rise apartments we all know and love?

Nootens: A lot of people expected COVID-19 to spur some different trends within multifamily development. While we’re seeing more co-working spaces and different uses of common areas than we did in the past, I don’t think there’s been quite as big of a long-term change as people thought the pandemic might bring about.

One area of multifamily that’s been gaining media attention is the build-to-rent (BTR) sector. You used to see it every once in a while, but now almost every one of our developer partners is looking for ways to expand into BTR if they haven’t already. I think that’s a sector that’s going to continue to expand and do well in certain markets. 

I’ve also seen four-or-five-story surface park products become more prevalent over the past few years. These are essentially a hybrid between a garden style and a wrap-style building. It’s usually a single, four-or-five-story building and will look and feel like an infill wrap or podium product, but it will have surface parking, which gives it the benefit of having a lower cost basis, similar to garden deals. That’s a project type that we love.

— Compiled by Lynn Peisner and Channing Hamilton

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