“I run because it’s so symbolic of life. You have to drive yourself to overcome the obstacles. You might feel that you can’t. But then you find your inner strength, and realize you’re capable of so much more than you thought.”
Allow me a word of advice: Run. That’s it. Just go run somewhere. I will not bore you with all the details about why running is great for your physical and mental fitness. Just trust me that they are both legitimate.
But aside from the physical and mental benefits, there also can be a business benefit.
If truly you want to get to know a local submarket or area, try jogging/running it.
Throw on your Mizunos and your running shorts, drive to a nearby parking lot and jog around the area you are trying to get to know.
Running not only allows you to release your tensions from the day, but it also allows to observe the trends and rhythms of the area if you pay attention and know what to look for.
Who is driving in and out of the parking lots? What is traffic like? How does the architecture fit with the area? What type of landscaping do the properties have?
These are all questions that you can answer while jogging that you may miss when blowing by in your Jeep.
When you casually jog by at 5mph you can take time to notice the landscaping around each property and how they compare to the others in the area. You can see that neoclassical architecture of Building A vs the renaissance style of Building B.
Why does this apartment building have Corinthian columns while each of the other 5 on this street have Ionic columns?
Why are there no cars in the parking lot at lunch time?
There are literally thousands of questions you can ask about an area while jogging through it. I have found that when I do that, I don’t need any music to keep me going. I am usually working through these questions in my head and trying to figure out if there is a potential deal to be done on the property I just passed.
You can certainly do most of these things while driving, but, as I said before, you go by much faster in a car and have very little time to stop and think about what you are seeing and the trends you have noticed.
So, take the time to jog around. Take different routes. Go at different times of day, month, and year. I guarantee that if you do that for a year you will become an expert in that particular submarket.
It seems like everything you read nationally and locally about ATL CRE is negative or pessimistic. I would like to remind everyone that it isn’t all blood-and-guts/doom-and-gloom and is actually a very rewarding industry. So, below is the list of my ten favorite aspects of Atlanta Commercial Real Estate and the reasons why I got into and have stayed in this business.
10. Passive Income. To me, the aspect of having passive income at some point in my career is extremely appealing. If I play my cards right and invest in the right deals, then I do not even have to go to work at a certain point. If I bought the right properties for the right price, then I can just sit at home and watch Oprah while my cash flow checks come pouring in every month. If I want to travel with my family, watch my kids’ sports, visit my relatives, or do anything else that takes time outside the office, then passive income is essential. Obviously there is a ton of hard work and sacrifice between where I am now and that point, but that is the carrot that I keep chasing every day.
9. The Schedule. Most people know how to kick it into high gear when a deal is on the line or when a bid/quote deadline is approaching. But you can still make a good living in this industry just working 8:30 to 5:30 every day. That allows you to have a life and hobbies outside of the office. CRE professionals can afford to be balanced and I value that highly.
8. Market Knowledge. By simply doing deals in your area you get to know that market intimately. I like when I can go out to dinner and tell you who owns the building, when they bought it, and how much the tenant is paying in rent. Because I have seen so many deals locally, people from outside the city will come and ask me about Atlanta and its submarkets even though I only know one or two of them very well. I am a knowledge junkie and love knowing so much about the buildings in my home town.
7. Travel. This doesn’t have to be international or even national travel. If you are in our industry, you will be getting into your car (or plane) frequently and visiting properties, owners, brokers, etc. You are NOT glued to your desk and a large part of the business is done on the golf course at the lunch table or on the softball field. I love that I don’t have to sit at my desk for the next 40 years to be successful.
6. Tangibility. I love the bricks-and-sticks of CRE. I had the opportunity to trade commodities, derivatives, or commercial paper out of undergrad, but I like working on projects where I can see and touch the asset I am trading, building, or financing. There is something satisfying about being able to see and touch the assets you spend years of your life working on.
5. $$$. Yes, you can make a ton of money in CRE (approximately $1Buttload) and that was a consideration for me when I was assessing my career path. I am going to bust my butt in anything I do, so I might as well be well compensated for it. Notice that this is not #1 on my list. It helps, but it isn’t my motivation (See #1).
4. The Variety. Every day is different. Like every other male on this planet, I am unofficially ADD and I prefer to have several different things occupying my mind rather than just one repetitive task. If I came into the office and did the same thing in the same place every day for every year of my career, then I would probably want to hurt myself. Variety keeps me interested and makes me want to get up every morning to face the new challenges of the day.
3. The Events. We know how to party. Every week there is some type of broker luncheon, networking event, happy hour, birthday party, or whatever. If you are in this business, you can find a way to socialize with your peers . . . often. I may not partake in all the events, but I appreciate their availability and always enjoy the events I do attend.
2. The Impact. Cities, states, and countries are just collections of people. Where those people spend their time when they are not at home is essentially commercial real estate. All the office buildings, shopping centers, industrial parks, event facilities, parks, etc are real estate projects. So we have the opportunity to change and improve the city we live in by creating places where people want to spend their time. How many other professions can say that they positively impact the shape of their city and state like CRE does? I think when I retire in 40 years I would like to be able to say that I left Atlanta better than I found it. That is something I can tell my grandkids.
1. The People. In case you haven’t figured it out yet, this is a people business. When you reach a certain age everyone has roughly the same skill set and knowledge base. One owner/developer is usually not appreciably smarter or “better” than the owner/developer next door (despite what he may tell you!). What distinguishes people here is the relationships they have and I have found that the people who tend to do the best in this business in the long run are just good people. They are ethical, intelligent, and well-spoken and they treat everyone with respect. As I have been networking and growing my contacts in this city, I have found that 9 out of 10 guys that I meet are just genuinely good guys. They actually care about you and want to help you. And that 10th guy you can smell from a mile away. He has developed a reputation as someone who is difficult or greedy or whatever and you will hear that from 15 different people before you ever meet the guy. You also hear about all the great guys in the business. I got into CRE for several of the reasons above, but I have stayed in the business for this reason. I find it very satisfying to talk business and do deals with my friends from around the city as opposed to some hedge fund manager from NYC. I like the people I deal with and meet and that makes any hardships or difficult deals THAT much easier. It is much easier to make up in the morning at 5am knowing I am going to work with my buddies today.
So, that’s my list. What is yours? What are some of the reasons why you chose CRE over another industry?
“Why Age and Wisdom are Separate Concepts”
I have noticed a bit of an unsettling trend as I have been meeting with people in commercial real estate. We have been worshiping at the altar of experience. That is, it seems like most people believe the single most important characteristic a real estate executive can have is experience and more is always better. People imply that, without fail, older (more experienced) CRE professionals are better decision-makers than younger professionals.
I beg to differ and I am going to tell you why. I will save my opinion on the most important characteristic of CRE executives for later, but for now let’s focus on the logic behind the “EXPERIENCE IS EVERYTHING” argument.
First, if I were to interpolate from that theory, then I would make it as granular as possible. Let’s take the idea that more-experienced (usually older) professionals make better decisions than less-experienced (younger) pros. If I were to apply that logic to a small level, say one day, then someone who has been in the business for one single day more than you would be a better decision-maker than you are because they are more experienced. Most people would agree that a 65-year-old CRE executive is probably a better decision-maker than a 25-year-old executive. But are you so sure of that logic that you say that someone with ONE more day of experience is a better decision-maker? I wouldn’t. It has to be several years, right?
Well that brings up another point. Even if I were to grant you that more experienced professionals always make wiser decisions than less experienced ones, I would ask you to define how much more experience is necessary? Is a 62 year old executive substantially better than a 52 year old executive? How about a 42 year old executive? Tell me the number of additional years experience necessary to distinguish an exceptional decision maker.
Let’s use an example to illustrate. Company X is going to interview you and your coworker, Joe, for the role of Managing Director of this office. You and Joe have the same role currently. You got in the business in 1995. Joe got in before that. You have outperformed Joe for each of the past 5 years and you almost doubled his revenue last year. Your network of contacts is probably three times Joe’s. Everything else about you two is exactly the same (age, height, looks, personality, skill set, etc.). First, let’s say Joe got into CRE in 1994. Who gets the job? Probably you, right? What if he got into CRE in 1990 (Making him a 20-year veteran and you just a 15 year veteran)? Does Joe get the job then? What about 1985? 1975? Does your company turn down the 35-year veteran for you? How many more years of experience for Joe will cancel out the fact that you are clearly the better candidate?
Hopefully you will recognize that everyone’s answer to that question will be different. That’s because there is no magic number or formula for the “right” amount of experience. It always depends on the situation, person, and company. Experience is no silver bullet.
Don’t believe me? Then let’s look around the city.
What companies around Atlanta (and the country, for that matter) have struggled mightily through the recession? Which firms have had massive layoffs, property defaults, bankruptcy filings? Now, how old is the senior executive of that firm. Each company has a head guy that has to sign off on every major decision and new development and he or she is ultimately responsible for the successes and failures of the company. So, are the executives of all these struggling companies in their twenties? Thirties?Fifties?
I would say the distribution is pretty even. I do not have any objective data in front of me, nor have I run a regression analysis that included executive age as an independent variable. But I am fairly certain that companies run by 60-year-olds had just as much trouble as companies run by 30-year-olds. Grandpa lost his shirt in the great recession just like everyone else did. So, all that fancy EXPERIENCE didn’t save investors from losing tens of millions of dollars on bad deals.
Now, I am not saying that experience doesn’t matter. In fact, it may be one of the more important tools a CRE professional can possess. But it is not the silver bullet/cure-all that people seem to think that it is. You can’t simply go out and hire the most experienced people in the city and assume you are going to make huge wads of money. It is much more complicated than that. My theory is that wise people will make good decisions regardless of their age. Old people DO NOT have a monopoly on wisdom and there is no magical age where you all of the sudden become wise.
I guess it comes down to human nature. We as humans tend to classify the people we meet. Since there are 7 billion people on the planet it would be physically impossible to know each one personally, so we classify people. For instance, if you are an Atlantan and you go and visit NYC, the people you meet will have opinions about the food you like, the sports you watch, the clothes you wear, the car you drive, the price of your house, or whatever. The point is, they have an idea of what people from Atlanta are like and they classify you in that group of people.
The same is happening with experience in CRE and it shouldn’t. Haven’t you heard people say “He’s fresh out of school” or “She is a 3 to 5 year experience girl” or “He is a junior VP type” or “She’s one of those 20 year veterans who lost her job in restructuring?” I bet you have. That bothers me because I believe (perhaps naievely) that more than anything else in our business, people matter. Your team and the people you work with are what will ultimately determine your success in this business. Surround yourself with winners, and you’ll win. Surround yourself with losers . . .
So, since people are the most important aspect of my business, I always try and take the time to get to know someone personally. I never look at resumes. I would rather have a nice, detailed conversation with someone about who they are than glance at where they went to school and what their first two jobs were. That will come up eventually. I want to know what type of person this man or woman is and where they see themselves in 10 years. That will tell me if it is worth my time to get to know them well. Some number (age) doesn’t really tell me anything.
Here is my request: Take your time to get to know people in the industry. Get to know them well. Don’t even waste your time with a resume because you will start to classify people in your head. Rather than classify someone as young or old or tall or a property manager or whatever, get to know someone’s current skill set, personality, hobbies, and wisdom. The people you meet who have a knack for relationships and tend to be great decision-makers (even with small decisions) will be the ones you will be reading about in the Business Chronicle sooner or later. In my opinion, people are the most important piece of our industry and the most important time you spend in your career won’t be visiting property or sitting in front of a model or going to county hearings or calling a broker, it will be the time you spend getting to know the people in your industry.
So please, let’s back away from the altar of experience and see if we can judge each professional on who they are and what their skills are, because if experience were all that mattered then we wouldn’t have hundreds of empty $500,000 townhomes in Villa Rica, Conyers and Eastpoint.
Am I wrong?