“What inning are we in?”
It’s a question that CRE professionals, especially those of us that have been through several real estate cycles, get asked regularly. Our industry is very cyclical, and the answer to this question can play a critical role in shaping many of our business decisions.
I’ve been active in the CRE industry since 1979 and have been through multiple market highs and lows. One thing I know for sure is that no matter where we are in the cycle, building and maintaining strong relationships is key for long-term success. It’s easier to build relationships when times are good but having strong relationships in place when times are bad can mean the difference between merely surviving and thriving.
I want to share how I maintain strong relationships with key groups in every part of our business, and I hope it helps you maintain strong relationships too.
- Brokers – Good relationships with brokers can give you an edge in the market. We’ve worked with some brokers for more than 25 years. We have even started to work with the second generation of brokers within the same firm. One key to a successful relationship with your brokers is to maintain open communication. Being responsive and transparent when discussing our needs has helped brokers bring us the best deals. It benefits us that many brokers have learned they can count on us to perform and to respond quickly to the deals they bring us. We also make a point to get to know our brokers outside of work through regular lunches and even regional trips.
- Employees – We have several staff members that have celebrated more than 25 years with the company. We’ve also grown our staff by more than 70 percent recently, so one of our goals is to continue to attract and retain top talent. To achieve this, we are routinely asking all our employees, “How can we do better?” We have listened to employee feedback and improved our company culture by offering more professional development opportunities, scheduling regular team outings and events, and recognizing employee accomplishments and milestones.
We also have employees working in several cities including Dallas, Atlanta, Milwaukee, and Chicago, so it can be a challenge to ensure that employees in different offices do not feel siloed. One way we are tackling this is to have our employees spend time together in a relaxed environment outside of work. Our recent leadership retreat in Napa offered lots of unstructured socialization time. It was so well received that we are planning another similar event next year. We also have regular video-conference meetings and encourage our employees from each office to visit our other office locations.
- Investors – Westmount has had investor relationships that span more than 30 years. For us, trust is the key to maintaining strong relationships with investors through both good and bad economic times. Investors need to know what we are doing to protect them and the asset/portfolio in a downturn. When times are good, they need to know what we are doing to mitigate risk. Consistent, honest communication through regular updates, calls and meetings has helped us maintain solid relationships with investors for decades.
- Lenders – Having strong relationships with your lenders can help them understand your business better. If you wait to connect with your lender only when you need them, it’s a little late. Having regular coffee or lunch with your bankers/lenders just to catch up helps build a solid foundation to help grow your business. Trusting lenders are more likely to offer you better rates, a faster approval process, and more flexible financing options.
- Tenants – As a value-add commercial real estate company, Westmount buys underperforming multifamily, industrial, and office properties. By making building and operational improvements, we achieve increased occupancy and rental rates. Within the industrial market, good tenant relations lead to expansions and lease renewals, and in some cases, tenants have even moved from one building in our portfolio to another to accommodate their growth.
Within the multifamily space, the landlord-to-resident relationship is very important because your tenants live at your property. When we assess a potential property, we look for the opportunity for a “signature amenity” on-site. Often this is a common area that is underserved, which has the potential to create a sense of “place.” One example of a signature amenity is an elaborate playground with oversized sails/canopies and soft flooring. Having a safe and fun play-space for children can transform the property into a community. Parents from the surrounding properties will bring their kids to play at the playground and they will get to know the community, residents, and employees, which can entice them to relocate to our property.
As real estate markets become more competitive, you must go beyond the fundamentals of relationship building through honesty and open communications. It’s important to think from the other person’s perspective to understand how he or she would like to receive communication and learn what he or she needs from you.
We’re enjoying strong CRE markets now, and relationships are key to our success. As CRE markets are potentially heading into a correction, maintaining strong, personal connections with your key stakeholders will be more important than ever.
Cliff Booth is president and CEO of Westmount Realty Capital.