There’s so much noise out there on how to navigate a challenging market. This April, let Inman help you cut through the clutter to make smart business decisions in real time. All month long, we’re taking it Back to Basics and finding out how real estate pros are evolving their systems and investing personally and professionally to drive growth.
In every organization, employees at some point will meet a wall. The app has bugs, the customer is unsatisfied, or sales leads have evaporated. All businesses confront these moments. In my business, however, the wall more often meets the team.
In late 2022, the Federal Reserve raised interest rates to their highest level in 15 years, raising our costs and briefly lowering rental demand in the multifamily real estate industry. Of course, that stressed our team members.
And they had questions:
- How concerned are you?
- Are we going to find properties to acquire?
- Can we execute a deal this quarter?
- Is the world coming to an end?
This represented a significant hump for our team. Instead of negotiating acquisitions or engaging in new deals, some employees momentarily froze in the face of uncertainty. Since real estate rests for no one, I immediately sought to alleviate their stress by explaining how our firm has approached disruption for decades.
Because we’re agile, well-capitalized, and connected, we have the ability to turn challenges into opportunities. So let’s do that, I told them. Yes, the Federal Reserve caught us by surprise and numbed the markets, which we didn’t foresee. But we’ve reset and adjusted, and now it’s time to embrace this challenge. Unsurprisingly, our team did.
The tools you need to nurture a team through tough times
Every team stalls or strands itself, as challenges, mount and deadlines approach. Successful leaders can nurture employees through these rough patches using a variety of strategies. Communication, honesty, transparency, and understanding are tools that drive positive change year-round but become even more important during down periods. Leaders should use them to assess issues, understand conflicts, and generate solutions.
Further, consultants recommend that leaders make frequent check-ins, encourage feedback and work collaboratively to minimize the impact of these humps. Team-building exercises and group breaks (take them bowling, for example) can untangle knots and restore a team’s clarity. Personally, I have found history to be an exceptional motivator. I share it as often as possible, and necessary, with my team.
Here’s my pitch, which combines experience, history and a bit of pep talk. The multifamily housing sector winds through cycles but has proven to be remarkably resilient. Apartment occupancy and rents climbed monthly for nearly two years before showing stagnancy late last year, according to The Wall Street Journal.
As the pandemic showed, people can work, shop and socialize remotely. But they can’t go to sleep at night or open their refrigerator in the morning on the internet.
Before that, during the subprime mortgage crisis of 2007 to 2008, I watched some investors shy away from numerous asset classes, including apartment complexes. Some sold properties to minimize their exposure, which created buying opportunities for entrepreneurial firms such as ours.
Our firm made some of its best deals during a time when large institutional buyers watched from the sideline. We acquired valuable properties at good prices, operated them successfully and created significant appreciation when conditions normalized.
Create a compelling message to guide your team
Our hump was getting past the external forces that made others nervous. Our response illustrated the values that have guided our business for five decades: Be calm and patient because everyone needs a place to live.
That message occasionally requires repeating, because we’re bombarded with bad news these days. I respond by telling our story. We develop and acquire multifamily communities in places where people need high-quality housing at affordable prices.
We develop innovative concepts in desirable locations. We know particular sites will work. We’ve studied regional demographics, occupancy levels of existing properties and population growth. We know we can bring value that isn’t currently available because that’s our business. Our metrics over time demonstrate an ability to surmount any hump before us.
In any business, even real estate, a stalled team isn’t necessarily negative. Facing humps benefits employees. It requires them to think strategically, find creative solutions and recommit to working together.
Friction heightens awareness, inspires curiosity and keeps employees vigilant. It leads them to try new things and step out of their comfort zone. Coaches of all kinds call this “getting comfortable being uncomfortable.” Good teams are already there.
Ultimately, the best way to get teams over a hump is to build good teams. They must be populated with focused and motivated employees hungry to do good work.
The right people are rare. Leaders who find them should nurture them, providing workplaces that reward people financially and professionally. Valued people bring buy-in to the workplace. They understand that ruts are unavoidable and temporary and that their best work happens over the long term.
In my experience, leaders who remain calm, keep their perspective and are good coaches are the best at helping their teams get over humps. And if all that fails, install a bar: I remember visiting McDonald’s global headquarters, which featured an outdoor terrace where bartenders poured after-hours beers for employees. “Can they do that?” I asked. Someone responded, “Oh sure, it’s a new day.”
I guess you never know when, or how, inspiration might strike.