The World Has Changed, Now What Do We Do?
Almost four years after the collapse of Lehman Brothers and the¬†beginnings of the most challenging economic recession since the¬†Great Depression, it has become clear that our world has changed.¬†More than a straightforward de-leveraging of the economy or a¬†re-strengthening of the global banking system, (as challenging,¬†painful and seemingly impossible those tasks are), it appears that¬†some assumptions about how the economy works, how to invest¬†successfully, and how to anticipate the future may have to be¬†re-evaluated. The world is unlikely to go back to where it was¬†before. But if that is the case, where is it going and how do¬†we plan for the future? As once explained by the 18th century Irish politician, author, and philosopher Edmund¬†Burke, ‚ÄúYou can never plan the future by the past.‚Äù Well understood by commercial real¬†estate investors, this truism is prompting leaders to focus their thinking on what is¬†happening now and what could happen in the future, not on what might have worked¬†before. In early June of 2012, a small group of commercial real estate leaders assembled¬†by the National Association of Real Estate Managers (NAREIM) gathered at a small hotel¬†in Chicago for the first annual 2020 Investor Summit to discuss changes, big and small,¬†and explore new ideas about real estate investing. The following areas were discussed:
- Real Estate Usage ‚Äì technology and demographic shifts are changing how people use¬†real estate ‚Äì and will likely make this recovery dramatically different from past recoveries.
- Investment Capital ‚Äì An exciting new development in defined contribution plans may¬†represent a huge potential source for new real estate investment capital.
- Human Capital ‚Äì As the economy recovers, fund raising, business continuity, risk and¬†governance all have a significant and challenging human capital aspect to be considered.
- Regulations, Accounting and Transactions ‚Äì Changes in accounting and structuring¬†of deals will have a meaningful impact on how investment managers need to conduct¬†their business.
- Information, Technology and Process ‚Äì Is it time now for the real estate investment¬†management firms of today to upgrade their approach by buying process rather¬†than technology?