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Commercial Real Estate

Navigating Turbulence in Today’s Commercial Real Estate Market

The Rainier Cos.' Danny Lovell says being adaptable, diversifying capital, and leveraging technology are key.

The commercial real estate market can be difficult to successfully navigate these days. Interest rates are at 15-year highs, banks are failing, and expert opinions change with the wind seemingly every week. It’s easy to feel like there isn’t much good news on the horizon.

As great as North Texas real estate has performed in the last decade plus, we are unfortunately starting to see some cracks. The following are a few recommendations to help navigate some of the turbulence ahead:

Stay Informed. Being up to date on industry trends, developments, and expert opinions is especially important during these times. Knowing what others are saying, doing, and thinking, regardless of if you agree with their opinions, is key. We are sending many more opinion articles around internally than usual, just so we better understand what the market thinks. We have found that looking at several different—and sometimes opposing—views fosters meaningful conversations and have gotten more than one good idea from the ensuing discussions.

Be Adaptable. Since our founding 20 years ago, we have been an agnostic commercial real estate investor focused, at some point, on just about every asset class. While trying to keep a pulse on the broader market, we’ve gravitated toward strategies based on what was happening around us. No matter your expertise, leaders in their field are resourceful, finding new ways to innovate, and position their products and services. There are many ways to maintain expertise while adjusting strategy to remain competitive.

Diversify Your Capital. In today’s market, debt and equity seem to have moved the goalpost. Real estate returns are harder to come by, and there doesn’t seem to be a premium for the additional risk—at least not yet. For these reasons, your go-to lender or equity investors may be on the sidelines or reluctant to jump in with you. Take this opportunity to meet new capital partners. When the market is good and debt/equity is cheap, it’s easy to call your “go-to” to get a deal done. By forming new relationships, you’ll deepen your bench, which will manage risk and enhance your options down the road.

Leverage Technology. Take advantage of software and digital platforms that help streamline processes and collect and analyze data to help you make better decisions. Our asset management and leasing teams can look at one of our shopping centers and tell you how many people walk where on a Sunday at 3 p.m. This is one example of leveraging data and technology to maximize value with tenants. We can accurately predict how much foot traffic one will get when leasing space from us in a specific location.

Communicate. In volatile times, communication is critical but can often be difficult since there isn’t much “good news” to give. Your clients, partners and investors want to hear from you even if things are in flux. Further, they want to know you are listening to and hearing their opinions and concerns. The more they know you care and are thinking about the present as well as planning for the future, the more comfortable and confident in you they will be.

As you march forward into the weekly grind of constant change, refocus and consider the concepts above. These are a few things we’re currently focused on at Rainier to help navigate this turbulent real estate market.

Danny Lovell is president and CEO of The Rainier Cos.