What Is Coronavirus and How Will It Affect Commercial Real Estate?
Let’s face it: the economy has been incredibly unstable lately.
And that’s led to a lot of anxiety in commercial real estate. How will firms weather the storm? Who will be best positioned for success on the other side of the current economic downturn?
According to Rethink CEO Vijay Mehra, the firms that will succeed moving forward are those that are embracing change for success.
“The folks who are able to adjust and pivot are the ones that will find themselves accelerating and excelling,” he explained. “Those who put their foot on the gas pedal will have the opportunity to come out of this stronger than when they went in.”
What it means to embrace change for success
Vijay’s passion for embracing change isn’t new.
In fact, embrace change for success is one of Rethink’s seven core values.
Rethink’s leadership team defined each value to provide a strategic direction that would ensure the success of Rethink and its clients.
“When we created these values, we focused on the client first,” Vijay said. “And defining our values helped us understand not only who we are today, but where we’re headed and who we’ll recruit. We know if a new strategy or hire doesn’t align with these values, then it’s not going to be a good fit.”
While defining the core values, embrace change for success quickly emerged as a key tenant of Rethink’s philosophy.
“It really resonated with us because we had seen so much change happen in our organization over the previous 14 years,” Vijay explained. “There had been so many pivots, turns, and changes — some we embraced, and some we shied away from. But we realized we saw the most success when we weren’t afraid of the challenges, when we invested in new ideas and implemented new processes.”
And now, he sees an opportunity for the CRE industry as a whole to embrace change.
Because the landscape is evolving so quickly, CRE firms can no longer do what they’ve always done and expect the same results.
“We don’t know what’s going to happen with so many of the companies filing for bankruptcy and the real estate that they have sitting behind their businesses,” Vijay noted. “We don’t know what’s going to happen with the new work-from-home model — Twitter announced they’re going to allow their entire workforce to work remotely from now on. What does that mean for the office industry?”
And even when the current crisis passes, firm leaders must remain vigilant.
“You never know what tomorrow is going to hold,” Vijay said. “You never know what kind of changes are on the horizon.”
So, how exactly can CRE firms embrace change today?
What is COVID-19?
Okay, so we know how COVID-19 will affect CRE, but what exactly is it?
COVID-19 is a novel form of coronavirus — a family of viruses that includes SARs, the common cold, and more.
According to the Centers for Disease Control and Prevention (CDC), COVID-19 is a “respiratory illness,” which “was first identified during an investigation into an outbreak in Wuhan, China.”
How CRE firms can embrace change for success
When it comes to positioning a CRE firm for success in our current environment, Vijay acknowledges there’s no silver bullet.
“It’s not going to be an easy undertaking,” he said. “No one coming out of this is going to say, ‘That was so simple!’ But opportunity is out there.”
One suggestion he has is to look at branching out into new asset classes.
“If you look at brokers who focus on one subset of commercial real estate — perhaps retail — they might want to venture out to new asset classes,” Vijay said. “Industrial is going to thrive. Office will take an interesting new turn, and there might be a new angle you can take there.”
Of course, he notes this path will take hard work, grit, and determination.
“You’ll have to build new relationships,” he explained. “If you don’t have a good grasp on the nuances of a new asset class, you’re going to have to learn them. Again, it won’t be easy and I’m not saying it’s the right answer for everyone, but it’s certainly one avenue you can explore.”
He also suggests learning how new technology can help your firm become more adaptable.
“Virtual tours will obviously be important, having technology that can help you collect and analyze comp data to appropriately underwrite a deal in this changing evironment is going to be critical, and we’ve already seen how technologies like Zoom and Google Hangout have flourished recently,” Vijay noted.
Finally, he suggests looking for new types of clients you can represent.
“If you’re a landlord rep in retail, maybe you don’t just look at standard tenants,” he said. “Start thinking creatively about the types of tenants who can make use of a Class A retail space. Start embracing this new wave of CRE to drive value for yourself and for property owners.
“And even on the tenant rep side, there’s inevitably going to be a new wave of folks looking for commercial real estate, and it’s up to you to figure out what that looks like,” he continued. “Make sure you’re flexible and creative in how you’re thinking about solutions for your clients.”
Vijay also noted that, for many people, taking these kinds of bold steps can be scary.
When your firm has always operated in a specific way, change can lead to fear and uncertainty.
But pushing past that fear is often what propels winning organizations to succeed in a volatile economy.
How to overcome the fear of change
When faced with change, people typically ask themselves: “What if I make the wrong choice?”
To that, Vijay has a simple response: “What if you make the right choice?”
“While there’s always the potential for failure, there’s just as much potential for success” he explained.
To mitigate the risk of failure, Vijay suggests taking a data-based approach that allows you to clearly see the risk and upside of any change you make.
“Underwrite the risk. Don’t just go on a whim,” he said. “That’s what’s helped us at Rethink. We have a leadership team that analyzes the changes we’re considering and weighs the pros and cons.”
That said, Vijay recognizes that even the best-laid plans can encounter unexpected roadblocks.
“We’ve had times where we thought the upside outweighed the risks, and things didn’t turn out like we expected. We failed,” he said. “But that doesn’t mean you give up on the idea. You learn from it. You find ways to iterate and improve. You’ve got to be relentless and build up a thick skin.”
Vijay also noted that making changes doesn’t have to mean you throw out the entire playbook.
“Not every change you make has to be something massive and dramatic,” he said. “It can be as simple as a tweak to a process. Innovation doesn’t always come in the form of silicon wafers and high-tech chips. You might just change the way you prospect, your email outreach approach, the way you’re marketing yourself, or how you’re pitching your services. These types of small changes can have a huge impact.”
How Rethink can help
Rethink’s cloud-based dealmaking platform is uniquely designed to support CRE firms as they grow and change.
As your firm evolves, Rethink’s customizable technology can adapt to support new workflows and processes.
And it has the reporting and analytics capabilities needed to give you visibility into how the changes you implement are impacting the bottom line.