Alliance Residential, one of the nation’s largest rental development companies, is celebrating its 25th anniversary.
“Twenty-five years ago, we set out to build communities where people truly want to live,” says chairman and CEO Jay Hiemenz. “We’ve always aimed to develop communities that are thoughtful, future-forward, and deeply connected to the needs of current and future residents.”
With the principals’ roots stretching back to the early 1990s, Alliance officially opened its doors in September 2000 with offices in Phoenix and Houston. Since then, it has produced over 136,000 units across 17 states and 33 metros representing over $27 billion in invested capital.
This year, it ranked No. 8 on the National Multifamily Housing Council’s top 25 developers list, starting nearly 4,000 units in 2024. It also ranked No. 10 on the top 25 builders list.
“When we started, we didn’t have any outside capital or any institutional investors or any existing portfolio,” Hiemenz says. “Looking back, we started all of this without outside help and had a model we believed in. We had this entrepreneurial thought of how to grow and replicate that model by hiring great local leadership in all the markets we wanted to be in. We did it all organically, and not through acquisitions or having support from outside capital.”
Hiemenz credits that entrepreneurial way the company was set up along with prudent risk management as keys to the company’s growth through the years.
“You’ve got to be mindful that there’s a lot of cyclicality in our market, and there are so many ups and downs, particularly on the development side,” he says. “Having that risk mitigation where we tried to borrow at conservative positions, we really limited our recourse, didn’t have unlimited personal guarantees that would sometimes in these cycles wipe developers out, never had corporate debt, and never inventoried land that we had to ride cycles on. Derisking financially and having a conservative mindset was well engineered on Alliance’s part to weather the cycle.”
For example, during the Great Financial Crisis, Alliance had a year without any starts because there was no capital to be had. However, the developer didn’t have to play defense in terms of its existing commitments recourse obligations.
“We were able to ride the cycle a little better and play offense. When the cycle came back, we weren’t funding old problems, but we could be opportunistic and continue growing,” Hiemenz notes.
Some of Alliance’s key milestones through the years include the launches of the Broadstone luxury brand in 2001; the Holden Senior Living brand that offers active-adult, independent living, assisted living, and affordable living solutions in 2015; and its attainable housing brand, Prose, which addresses the rising demand for high-quality, affordable living solutions.
“We’re focused on the existing brands and why we made them in the first place, with plans to expand those across more market footprint, particularly the Prose brand,” he says. “Prose is more affordable, it speaks to the middle market, and there’s such a lack of more affordable options in the market. That’s a brand you can take to much smaller markets and still have a pretty wide demand band. It ebbs and flows of which of the segments are going to produce proportionately more of our starts. But we’ll continue the Prose focus because of that fact.”
Another milestone for Alliance occurred last year, with Japanese real estate company Daiwa House Group investing in the developer.
“We’re very excited to finally bring in an institutional capital partner that we hadn’t had for 24 years. We have a great partner in Daiwa House,” Hiemenz notes.
He says the partnership benefits Alliance in several ways. First, Daiwa House is a $50 billion partner that wants to grow, recognizing that the U.S. market has much better demographics than Japan, which is seeing a declining population base.
“They want to grow, and they are pushing us to grow,” he says.
Another benefit is that Daiwa House in Japan is a leader focused on building techniques with modular factories and can provide learning models. Alliance is the first and exclusive rental platform for Daiwa House, which owns U.S. home builders Stanley Martin, CastleRock Communities, and Trumark Cos. Hiemenz notes Alliance also has the opportunity to explore joint purchasing and capturing more volume opportunities from a pricing standpoint.
The third benefit, he says, is the exposure to the Asian capital markets. Alliance recently closed its first deal with a Japanese bank, which came from an introduction from Daiwa House. “They already have been and are going to be super helpful to expand our reach internationally.”
Looking at this year and into the future, Hiemenz says Alliance is going to do more than it did in 2024, which was more locked down with capital, and is “cautiously optimistic” that 2026 will be better than 2025.
He says he doesn’t expect capital to come flooding back because of too much uncertainty, but demand is good with record absorption and the overbuilding subsiding, which sets up a good next cycle.
Alliance has a pipeline of almost 18,000 units. “That’s something we usually put in production over the next couple of years,” he says. “That’s our rough guidance for 2026 and 2027 that we can do 18,000 collectively. It will take a little more capital to come back, but I think it will. We’ve been in this high interest malaise longer than everyone thought it would be. But it’s starting to subside with the 10-year hovering below 4%. I think 2026 will be better both from a new investment standpoint and from a disposition standpoint. I think transactions will start to increase as we head into 2026.”
Hiemenz adds he’s encouraged for the short and long term. “I think our future in multifamily and our future at Alliance looks pretty good in this crazy cyclical U.S. multifamily business we’re in,” he says. “I’m excited for the next three to five years.”