Atlanta-based Wood Partners, the fourth-largest developer in the country, is transferring property management operations for its roughly 38,000 units across 17 states to Charleston, South Carolina-based Greystar, the largest apartment manager in the country.

Under the terms of the agreement announced via press release on Thursday, Wood Property Management employees will become Greystar employees. Greystar will also serve as property manager for all current and future Wood-developed and owned assets. Terms and timing of the deal were not disclosed.

With the Wood portfolio, Greystar will operate 895,000 units across over 3,200 communities with 24,000 team employees, according to the release. But the sheer number of units wasn’t the only driver for Greystar, which acquired the management operations of Scottsdale, Arizona-based developer Alliance Residential in 2020.

Both Greystar’s founder, Bob Faith, and Wood’s founder, Leonard Wood Sr., previously worked at Trammell Crow, a Dallas-based global investor and developer of real estate. 

“It was certainly an opportunity to grow Greystar but also grow Greystar with a good company that was culturally compatible and founded on the same principles,” Mike Clow, executive managing director of Greystar’s U.S. Real Estate Services, told Multifamily Dive. “If you look at their pillars and values and our pillars and values, they're the same.”

Scale matters

Wood had been growing its management business under Steve Hallsey, former executive vice president of operations at the company, but had hit a limit. 

“[The agreement with Greystar] was the right thing for the company to do at this time,” Hallsey, no longer at Wood, told Multifamily Dive. “With our resources, we grew the third-party fee management business as far as we could. Greystar will take the platform to the next level.”

While Clow couldn’t comment on Wood’s motivations, he said it can be challenging to compete in property management without a certain amount of scale.

“This is a tough business,” Clow said. “So it's not easy for companies to do that in 17 cities with 10,000 units [overall] when Greystar has 20,000 to 30,000 units in 42 cities across the country.” 

As it becomes more necessary for apartment owners to invest in technology for both resident-facing and back-office features, being bigger will matter even more.

“I have economies of scale, which allows me to be more effective,” Clow said. “To invest in the technology, to invest in the people and to invest in marketing is becoming harder to do in this part of the business.” 

A growing trend

Wood and Alliance aren’t the only prominent apartment developers to recently decide to outsource at least parts of their property management business.

In March 2023, Altman Management Co. partnered with Atlanta-based third-party residential property management firm RAM Partners to provide back-office management services. AMC, the property management division of Fort Lauderdale, Florida-based developer, builder and manager The Altman Cos., continued to handle resident-facing functions. 

In April 2023, Arlington, Virginia-based AvalonBay Communities and Atlanta-based Gables Residential announced that they entered into an agreement for AVB’s centralized service center to provide back-office financial administrative support services to Gables, which manages and builds apartments.

AVB, the No. 4 owner in the country, is responsible for customer service and account inquiry support, billing, legal and eviction support, delinquency notification and payment and security deposit processing services across the entire Gables Residential portfolio of over 25,000 apartments across 10 states and Washington D.C.

“We are not offering property management services under our agreement with Gables nor do we intend to do so,” AVB CFO Kevin O’Shea said on the REIT’s Q1 2023 earnings call in April. “All business and operational decisions related to AvalonBay and Gables portfolios will continue to be managed separately by each company.”

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