As we ease out of lockdown and start a journey of recovery, I’m not so confident it is going to be a smooth one. While some sectors may be insulated, a global recession will likely impact the entire real estate industry and test many of us who work in it. But this doesn’t have to be bad news. For some of you these challenges could well be your career-defining moment.
Years ago, my father introduced me to Theodore Roosevelt’s 1910 speech at the Sorbonne commonly known as “The Man in the Arena”, which we have on the wall of Seaforth Land’s offices in Farringdon (edited to the more inclusionary, “The One in the Arena”).
In the speech the former US president extolls the person “who is actually in the arena, whose face is marred by dust and sweat and blood… who at the best knows in the end the triumph of high achievement, and who at the worst, if they fail, at least fails while daring greatly, so that their place shall never be with those cold and timid souls who know neither victory nor defeat”.
Are you ready to climb into that arena?
Wins and fails
Of course, we all love a rising, liquid market; it’s easier to get deals done and easier to make money. But for me there is nothing more rewarding than climbing into that arena. Executing in a challenging market, one learns to be more disciplined and process-driven. More persistent and adaptive to changing conditions. More intelligent and empathetic to listen to and structure transactions that are good for us and for our clients. These are the times when you can really hone your craft, whatever your role is within the investment life cycle.
I would love to be wrong, but I believe each of us owes it to ourselves and to our team members to prepare now for what could be a prolonged challenging environment. That does not mean lowering expectations for wins, but just recognising the journey will be a harder one.
We have all read about Colonel Sanders’ 1,009 rejections before finally finding an investor to back KFC. At Seaforth we have built a business around vetting more than 200 deals a year and averaging only one (great) investment a year. A pessimist would say that we are failing 200 times a year. But the past few post-referendum years were actually great for growth of team and assets – a trend we plan on continuing in the current market.
Challenge the mantra
Yes, Covid-19 is going to be different. But “this time it’s different” is a throw-away line that more often than not is used by the misinformed. I have been through a few exogenous shocks to the market, including the Gulf War recession, Asia financial crisis, the 9/11 and dotcom recession, SARS in Hong Kong, and the global financial crisis, and it always starts with dire projections and ends with a very different reality.
Right now, as I read articles proclaiming the death of office space, I remember those authors who after 9/11 declared the death of high rises and who only recently declared that traditional offices were going to be replaced by flexible offices.
We owe it to ourselves and our industry to be as well informed as we can about the implications of Covid-19 if we are to adapt and evolve our businesses and strategies to thrive in the market conditions ahead. Take in all the research you can, interrogate the data and underlying assumptions, and develop your own informed views. Better intelligence and transparency lead to better investing and ultimately improve market efficiency.
I think it is always productive to periodically do a self-evaluation of what and how you are doing things. Challenging oneself and getting out of one’s comfort zone is fertile ground for growth. If I’m right and conditions do get challenging, you are far better off proactively embracing this exercise now than risking a more reactive approach later when it may be too late for you and your team.
Tyler Goodwin is chief executive of Seaforth Land