Publisher's Synopsis
The Soul of Real Estate Over the past decades, real estate developers have come to rely on the ebb and flow of the business cycle. Since the 1960s, the peaks between these cycles have averaged between seven and ten years. So we unquestionably know that they are coming. During the upward pendulum swing of an economic cycle, we consistently invest. This occurs during the period of stable growth and through the inevitable debaucheristic overbuilding. Once the inevitable bubble bursts, we shift into the mode of holding on to as much of our investment portfolio as possible and attempt to avoid bankruptcy. Often we find ourselves battling demons that we ourselves created. Whether we were constructing too many projects, building and investing in risky locations, or cross-collateralizing our investments so that when one or two fail, they all fail; the problems that typically threaten our demise are our own greed and stupidity. In addition, the product that the developer creates has become consistently more expensive, denser and more complex, and yet the structure of the firm has not metamorphosed itself to better contemplate the real world challenges that developers face. In fact, through some anti-Darwinian paradigm shift, the skills within our firms have devolved to the point that good, responsive, attractive and profitable buildings are more a product of chance than intelligent design. Whereas they were once tasked with placing a square peg in a square hole, the complexity of the responsibility hoist upon our current and future developers requires that they manufacture irregular pegs for a series of ever-changing shaped holes. Most of us are ill-prepared for this reality. Our path is not yet set in stone. The opportunity remains ours to return the greatest of professions to its rightful magnificence. And so we real estate developers have two daunting tasks; first we must continue to evolve and make buildings, and second, we must reverse the downward trajectory of the profession of development. We must save development from the developers. The Soul of Real Estate (TSORE) is intended to begin that conversation. In part one we explore, opine and offer solutions to our most basic and existential dilemmas. We will suggest different values and provide a vision for the future. Part two applies those premises toward a practical and methodical implementation. After all, we will surely fail if our solution doesn't seem achievable. We must dismantle the broken clock that is real estate development, and reengineer and reassemble its parts if we ever expect it to tell time again. Because development firms differ in scale, region and product type, there is not a one-size-fits-all solution. Each of our organizations will be distinct. However, if the fundamental stability that we discuss is present in each of our organizations, the world of development (and consequently the world) will be a better place. Our hope is that this discussion is one that we will have throughout our lives; first as students in school, later during the times when we are most beaten down and the profession feels bleakest, and again as we form the basis of our own firms. Our hope is that we never again forgot who we are, why we do what we do, and how great it can be when we do it well. Our hope is that this conversation is just the beginning.
