I often describe the real estate cycle as a clock; each hour brings different opportunities. As time moves on, so do the opportunities. What worked an hour ago may not work now, but a new set of opportunities appear.
The most important lesson I’ve learned is that the clock only moves forward. Leaders get into trouble when they wish it would move backward, holding on to deals that no longer work. When leaders know where they are on the clock, they don’t panic and keep moving forward. Here’s how I’ve put that thinking into practice.
Re-evaluate the model, not just the plan. For years, our approach was simple: build it, lease it, sell it. When rent growth flattened and investment capital tightened, buyers could no longer meet our investors’ pricing expectations. We shifted to build it, lease it, hold it. As a result, our portfolio is roughly 10,000 apartments larger than it would have been otherwise. Every industry has its own version of this moment. A model that worked brilliantly in one cycle can quietly stop working in the next. The leaders who come out ahead are willing to question their own playbook before the market forces them to, even today as we enter a higher interest rate environment.
Reshape your team for the new cycle. A team built for one season may not be the right team for the next. Our asset management team was originally designed to sell properties. As the market changed, the team expanded into refinancing, restructuring investments and longer-term holds, which required new skills, new reporting and different conversations with our partners. Sometimes reshaping means expanding a team to add new capabilities. At other times it means investing in coaching, helping new managers build confidence and giving experienced leaders room to sharpen their skills for challenges they haven’t faced before.
Name the season you’re in. During one challenging stretch, I told our team on NRP News Live, our monthly internal broadcast, that we were trading a sports car for a heavy-duty truck. In my words, a Porsche for an F-150. We put on our snow tires, became more selective and focused on the deals we pursued as a company. Naming the season provided transparency for our team so they could stay confident in the plan.
Stay disciplined while you adapt. Riding the wave doesn’t mean chasing every wave. We operate only in markets we’ve carefully vetted, which keeps us from being distracted by tempting one-off opportunities. Discipline creates freedom.
Don’t believe your own press. Success can gradually lead leaders to stop paying attention. Headlines don’t build apartment communities; the business, the work and our people do. Staying humble keeps us honest about what’s changing.
Be present with your people. In a world of constant distraction, giving someone your full attention is one of the most valuable things a leader can offer. The clearest signals about what’s changing often come from the people closest to the work.
The clock will keep moving. The leaders who thrive stay in the moment, know where they stand on the clock, and reshape their business and their teams to meet it. ●
J. David Heller is President, CEO and Co-founder of The NRP Group
