You’ve heard the saying, “The more things change, the more they remain the same.” Don’t bet on it. Change is happening at an increasing rate. Enjoy today and take time to breath because today will be the slowest rate of change that you experience in your life.
We resist change naturally. And the longer we resist, the more painful adaptation becomes. Like the Borg, resistance is futile. The more things change, the more of what remains must succumb. Imagine how change required massive adaptation to accommodate indoor plumbing in the 1850s, electric lights in the 1900s, telephones in the 1950’s, central air conditioning in the 1970s, cable in the 1980s, satellite in the 1990s, and internet in the 2000s. Take a moment to consider how the following items in the context of change:
Urbanization, Toys R Us, suburbanization, Comp USA, aging population, Kmart, communications, megacities, the environment, design, carbon footprint, borders books, integration, self-driving vehicles, Kodak, internet, energy prices, We Works, the Americans with Disabilities Act, climate change, Lidl, infrastructure, Compaq, call centers, competition, Macy’s, CAD, prefabrication, Payless Shoes, connected workplaces, opportunity zones, border security, charter schools, terrorism, Southeastern Grocers, privacy, telecommuting, shared workspaces, UBER, mixed reality, office hoteling, Qualcomm, LEED, politics, digital controls, privacy, the Pan American Building, Tesla, sustainability, the cassette tape, the CD, streaming, Tower Records, PVC, labor availability, green economy, amazon, R22, data centers, construction costs, Energy Star, 5G, marijuana, terrorism, security, robotics, Arthur Anderson, RFID, brick and mortar, click and order, electrical resistance heaters, vaping, security, taxes, FOBS, the “cloud,” robotics, tailgating, blockbuster, LED, variable speed drives, Radio Shack, geofencing, last-mile distribution, tort reform, Whole Foods, technical schools, the internet of things, 3D printing, amenity creep, live/work/play, healthcare, solar, immigration, Trader Joe’s, water, Tiffany & Company, the Bankruptcy Reform Act, globalization, digital printers, USTs, regulation, public opinion, and food deserts.
It pains me to think that when I got into real estate, “CBD” meant “central business district.”
Change transforms how we live and work, and our lives and work alter how we use real estate. So what does it mean when real estate professionals sit on a panel to discuss “best practices?” The concept is practically obsolete. In a changing world, how can a static set of “best practices” remain relevant? In the same sense, it’s not safe to follow today’s industry leaders. What has made them successful in the past is no guaranty of their success in the future. You don’t drive a car looking in the rear-view mirror. Future success depends upon today’s ability to foresee change and innovate.
Innovation presents its own set of challenges. You can’t plan to innovate. Innovation requires action. Being an innovator demands that the real estate manager itself becomes an agent of change.
Perhaps the good news is that success and survival aren’t mandatory. We can sit back in our La-Z Boys, remote control in one hand, cold beer in the other, and simply wait till the grim reaper arrives. But if we have any hope of remaining relevant, we must adapt and see that our respective organizations follow. Real estate companies must become learning organizations. We must create feedback loops and communication pathways to collect and direct market, tenant, and technological information efficiently to facilitate faster and more relevant decision making. And to complete the transformation, as we learn from this flow of communication, we must internalize a culture of constant improvement to raise quality and reduce costs. Owners can no longer afford to ignore the signals. We must observe, think, process and act.
Of course the “old school” landlords will not change, and they will not disappear immediately. But time is their enemy. They will continue to defer improvements and require tenants to “adapt to the property” instead of improving the property to meet tenant needs in a better way. At first, rent reductions and other concessions will help them retain tenants. Eventually, however, both occupancy and rent will fall together – and that will be their end. And that will create tremendous opportunities for a new wave of real estate entrepreneurs.
I’m looking forward to the future, it’s going to be great, it’s going to be fun, and it won’t be business as usual.
