Younger CRE Professionals Show Their Resiliency

VOLATILITY IS INHERENT IN REAL ESTATE—HOW COULD IT be otherwise in a market that is largely hostage to interest rates/? But it being the norm doesn’t necessarily make it easier to deal with, and CRE professionals are currently having to channel their inner resilience to navigate the challenges of the moment.

The younger cohort may be best placed to advise how to ride the big waves, however, given the multiple crises that have characterized their still-green careers along with their inherent flexibility, creativity and tech-savviness. This is the general consensus among Real Estate Forum’s top 50 under-40 designees.

“The current real estate market can be very challenging, particularly for younger professionals with high competition and limited inventory,” says Penny Chung, principal of LT Commercial Group. “However, the determination and creativity of our generation can help to overcome these obstacles and find new ways to make deals happen.”

Andy Klein, managing director and co-head of investments at Lionheart Strategic Management, LLC characterizes his generation’s perspective as one that has been uniquely informed by a number of epochal events in a relatively compressed timeframe.

“Many of my peers experienced the global financial crisis early in our careers (and have the scars to prove it), then navigated a steady yet slow economic recovery from 2009-2019 only to experience the whipsaw effects of the Covid-19 pandemic,” he says. “Now, we’re seeing unprecedented inflation and the resulting interest rate increases being employed by the Fed to combat the current capital markets. Without trying to be trite, I’ve learned to adopt an ‘expect the unexpected’ viewpoint throughout my career and make sure there’s a viable alternative or downside case to any transaction.”

Jaclyn Scarinci, a partner at Akerman, seconds this view. “My generation is in the unique position of entering [the industry] after the 2008 recession, unsure of how to navigate the post-recession real estate market. We saw the hit to the market, participated in the eventual rebound, and learned many lessons along the way,” she says.

These experiences are serving the under-40s well as they understand what goes down inevitably goes back up again, and that there is always opportunity even in a downturn.

“We are a group that weathered a storm and then built a career from the growth of the aftermath,” says Doug Faron, co-founder and managing partner at Shoreham Capital. “As we approach another down cycle, we can take this perspective with us, and while there is dislocation to come, we are looking ahead at the growth and opportunity to come.”

In a similar vein, Matthew Gottesdiener, CEO of Northland, says: “Uncertainty presents opportunity for those prepared, and for those fortunate enough, as Northland is, to have duration and discretion in their capital.”

ACCEPTING CURRENT EVENTS

There is a general sanguinity about the current challenges, or at least an acceptance that it is simply the nature of it.

“A lot of times with volatility, you just have to ride it out. If you could plan how to deal with volatility, it wouldn’t be volatility, so it wouldn’t be something you could hedge,” says Lisa Murphy, senior strategic initiatives manager at M&T Bank. “It’s just about staying aware and being prepared.”

Clarity of vision helps, according to Deepak Dewani, chief strategy officer at CBRE in Washington, DC. “We are living in unprecedented times and are witnessing significant geopolitical, economic and social changes unfold in front of us. In times like these, I view the capability to think clearly and cut through the noise as being paramount,” he says.

Creativity is also key, as is flexibility. “Real estate is obviously one of the more valuable assets we have, with an important history, but there is room for creativity. There is room for fresh ideas and flexibility to make things happen,” says Lauren Villano, vice president of ACRE.

“The market and how deals are conducted is ever changing. You need to be flexible and able to mold how you are working to what is happening around you,” agrees Lauren Federgreen, owner of Rose Real Estate LLC.

There are multiple strategies being deployed to cope with the uncertain environment but most of them come down to being more cautious and selective.

“In the midst of this current environment, we’re playing defense with respect to any loans that are coming due with office properties. We saw that it was gonna be a challenging environment, so we’ve been talking to our lenders,” says David E. Seifert, partner at Velocis.

“We’re being cautious,” says Ohad Porat, chief investment officer at Faropoint. “We will get out of it. The negative side is that it’s probably going to take longer than we want. It’s a cycle. I’m trying to look at it from a very technical standpoint.”

“I’m being a lot more selective with buyers,” says Gabriel Coe, senior managing director at Marcus & Millichap. “We’ve had several deals where we’ve advised the seller to take a lower offer, just because it was a safer and more reliable buyer.”

Crisis can often bring an opportunity for a reset, and for new perspectives, and the industry’s young stars are viewing the volatility very much through that prism.

“It is essential to recognize that the world we are surrounded by is constantly evolving and growing rapidly. With this, we can all benefit from adopting a refreshed perspective, being more in-tune with and receptive to incorporating advancements in technology, data, and trends,” Benjamin Birnbaum, vice chairman at Newmark in New York.

Michelle Klingenberg, senior vice president at JLL in Cincinnati, agrees. “I use this as a time to kind of reset and network because the market will always come back. It’s a good opportunity for us to kind of take a step back and look at our business level and see what we can tweak to make us more efficient and take on really good products,” she says.

A ROLE IN CRE’S EVOLUTION

The under-40s also have a major role to play in the evolution of the industry, and among other unique attributes are bringing a greater focus on ESG.

“Our opportunity is to create who and what this adaptable industry could be like 20 years from now,” Tommy Mello, executive vice president at A10 Capital. “While ESG has been a significant topic in the industry over the last decade, its adoption likely be an ingrained focus that has not always been the historical precedent.”

Chase Bourdelaise, managing director at Transwestern, says: “We are more focused on sustainability and the environment, which is becoming an increasingly important consideration in real estate decision-making.”

Anna Malhari, COO of Veris Residential, says her generation is prone to “looking at things more responsibly”, which is ensuring evolution in the industry. “This really changes the way real estate operates, the people we work with, how we approach our residence tenants relationships and the industry as a whole,” she says.

“ESG and responsible investing have become more important than ever before, driven largely by younger generations active in the industry today,” Kristi Nootens, co-head of CP Capital US. “We also tend to be more open to and accepting of change, including using technology and data to inform our investment decisions and strategies.

RESHAPING THE MARKET

Through the ups and downs of the market, young leaders of the industry are fundamentally reshaping how real estate is used and conceptualized, as consumers and occupiers as well as CRE professionals.

“We’re driving the industry more so as consumers: acceptance of coliving, demand for coworking, preference for mobile engagement, use of social media, etc,” says Casey Lasda, senior vice president, underwriting and customer success, at TheGuarantors.

Chris Logsdon, VP, construction, at The RMR Group says, “[We bring] an understanding that office space today should be dynamic and enjoyable considering it is where we spend so much of our time.”

Steve Majich, managing director and head of US development at BentallGreenOak, agrees. “We’re more open to the idea that we need to blend different places and spaces, and the impact on real estate is playing out as we shape the vision for projects of all asset classes to support and sustain modern lifestyle,” he says.

It is all part of a broader shift in society, enabled by innovation and new technologies, of which Millenials and those younger tend to be at the forefront.

“We’re influencing a fundamental shift toward a ‘sharing economy,’ which is eroding the concept of ‘ownership’,” says Don Wenner, CEO of DLP Capital. “We no longer need to own a home, because we can rent a home for a day or a week from any number of short-term rental companies, just as we can jump in an Uber rather than rent a car.”

In short, says Sean Gilbert, principal, acquisitions, at Saxum Real Estate, “Our generation is not afraid to change how past generations historically designed and built real estate.”