Best Practices for CRE Professionals Navigating the 2020 Recession
If you’re like most CRE professionals, you have a lot of questions and concerns about navigating the 2020 recession. There’s no denying it – things look bleak. Yet as many leading lights in the commercial real estate industry are pointing out, there are strategic steps you can take to mitigate losses and actually strengthen your position for a dramatic comeback when the dust settles.
The Bad News
The bad news is we are facing an almost certain recession, and it could the sharpest correction most of us have seen in our lifetimes. We who make our living buying, selling, building, and managing commercial real estate have to face facts. The recession is coming.
Are we in a recession now? Well, not officially, no. An economic recession is defined as a period of at least six months of economic shrinking. While our economy has been dramatically shrinking, it’s only been since March. We won’t officially be in a recession until this continues through August. But experts agree that’s only a technicality – our economy is already shrinking rapidly.
The Good News
However, while it may be easy to give in to fear, economists and CRE experts tell us not to panic. Navigating the 2020 recession strategically will require calm thinking and perspective. After all, the 2008 recession was historically dismal, yet many real estate investors and CRE professionals came out of that crisis stronger than ever. And there are many reasons to believe this current crisis presents similar opportunities for those who are vigilant, aware, and strategically focused.
Top economists and CRE experts predict the damage will largely be short-term, and the turnaround will be quick. Indeed, many of the reasons 2008 was so bad are not in play for this unordinary downturn.
If you’re wondering what your top priorities should be right now to minimize ill effects and weather this downturn successfully, here are a few best practices to help. These tips and strategies will position you to come through a bad storm with a smile on your face and a bright future ahead.
Top 5 Considerations for Navigating the 2020 Recession
1. First, don’t get over leveraged. Properties with large debt ratios should be re-considered. Keep your expenses and overhead low. This should go without saying.
2. Next, focus on communication. Talk to your team. Talk to your investors. Talk to your colleagues. We’re in this together, and we will get out of this together. Now is the time to be in touch with tenants, lenders, and all involved parties. Keep those communication lines open to manage expectations and timelines. We’re all in the same boat, so be open and honest with others to build trust and understanding.
3. Don’t neglect your properties. Right now, it may be tempting to stop managing your properties. Going without cash flow for a couple months is understandable, but keep managing the property to keep it viable in the coming downturn. You want your properties to be as attractive and competitive as possible.
4. Stay in the game. Prospect and hustle like it’s 2019. Right now is when it matters most. Because things will be very slow in 6-12 months, and the early work you do right now to fill your pipeline will pay off when you need it most. Navigating the 2020 recession and coming out of it stronger in 2021 will require dedicated efforts to plan and grow when everyone else is crippled with fear.
5. Examine yourself and your priorities. Is your career path on the right track? Stress has a way of sorting out our strengths and weaknesses. This is a perfect opportunity to take stock of where you are and where you want to be. Take time to reflect on what you bring to the table in a crisis like this one – and whether rising to the challenge means making changes or doing more of the same.
Whether you work in investment, management, construction, or sales, keep your wits about you. As Mark Twain is rumored to have once said, every crisis is an opportunity in work clothes. So roll up your sleeves and start planning your comeback. This is when leaders are made.