Waiting for the Next Cycle

Guest contributor: Matt Slepin, Managing Director Emeritus and Global Co-Head of Real Estate, ZRG Partners

The commercial real estate investment business has largely been in a down cycle since COVID and the interest rate pops. This is particularly true in the multifamily business, but applies to most of the other real estate sectors.The cycle will turn and will largely normalize, except office which will have to find a new normal, and the savvy businesses with staying power are using this time to transform and upgrade their business platforms to be competitive into the future. All institutional scaled businesses, including real estate, are in a transformational state and it will be the CRE companies with the strongest business platforms that will thrive in the future.

What do we mean by “business platform?” What is a “resilient business” looking forward? The business platform is the enchilada looked at holistically. It has stable and market competitive capital. It has a strong leadership team that, like office buildings, do not have all of its leases rolling at the same time. That means diversity of experience, varied years to retirement and thoughtful succession planning and governance. It has a business operating platform that values operations and management as much as it does transactions and it is at least at-the-curve versus behind-the-curve on technology and data implementation. No one knows all of the ways in which AI will impact the business, but it is engaged now in utilizing AI across the disciplines in the business. The resilient platform has both leadership and culture to wrap this together into a cohesive business.

These are not normal skill sets for leaders in the CRE world. In the past, the winners might have largely focused on growth, transactions and capital versus. But the day of the holistic business platform is dawning. It is in this context that firms like ZRG and RKE excel in helping companies attract talent ready for these challenges and integrate the skill sets in the business into great companies. And these are the topics that I get to explore with great leaders on the Leading Voices in Real Estate podcast. Let us know how we can help you.