Guest: Byron Carlock, a coach at CEO Coaching International. Byron is a distinguished real estate executive with 38 years of experience that spans the full real estate lifecycle from strategy to execution.
Quick Background: COVID, WFH, NIMBYs, and YIMBYs were already accelerating changes to how and where we work and live. Now leaders in the real estate sector are also contending with major political hurdles, higher interest rates, and inflated costs across the board.
But there are also BIG opportunities in real estate for CEOs who know how to spot value and serve the needs of customers and their communities.
On today’s show, Byron Carlock explains how leaders in real estate and other industries can align strategy, capital, and policy to Make BIG Happen in this complex environment.
Keys to Mastering the Real Estate Market From Byron Carlock
1. Understand the Trends
We’ve all read the same stories: the BIG, beautiful office building downtown that’s been facing occupancy issues since the pandemic finally sold — for a fraction of what it would have gone for a decade ago.
“That’s a great example of the transformation that the real estate industry’s going through,” Byron Carlock says. “COVID affected different product types in different ways, but it especially affected offices as we began a new genre of space utilization called ‘remote work.’ Before COVID, we were already going through a transformation in the retail space as we looked at the impact of home delivery and e-commerce on the effects of bricks and mortar. And we’ve worked through that. Right now we are going through a major recovery post COVID as people now have returned to the office in most industries, although they’re still working in a hybrid situation. Retail has recovered nicely. The consumer is spending money. We need additional housing. We are anywhere from 3.5 to 6.5 million units short in this country, but the capital markets are slow to catch up and the costs are still high to develop.”
As offices, retail, and housing complete their adjustment to postpandemic trends and technological advances, Byron believes that the next phase will be a complete rethinking of how communities use space. With more folks working from home, public spaces might become more walkable. Zoning laws might allow for greater population density to address housing shortages. And CEOs will have to identify the most practical environments for their businesses to succeed.
“Some cities and companies allowed remote working for a long time and it changed the demand patterns for offices,” Byron says. “Meanwhile, a new type of office, we call it the ‘techno office’ or the ‘A+ office,’ began to supplant offices that had fallen into disregard, maybe lost some tenancy, lost some relevance, didn’t maintain technology or décor the way other buildings did. They are trading at a deep discount. And we’ll see good offices be torn down in this next cycle.”
2. Combine the Analog and the Digital
Moments of transition tend to bring out doomsayers. But while “the death of the office” and mortgage rate panic might get social media clicks, Byron doesn’t believe real estate is facing a Great Recession-level crisis. Instead, companies in all industries are trying to find the right mix of digital, analog, human, and brick-and-mortar tools to meet the needs of their businesses and their customers.
“ I didn’t know what a Zoom call was 10 years ago,” Byron says. “We wouldn’t have imagined that entire organizations would be functioning with remote employees. Now we have companies functioning with a remote finance department, a remote technology department, assistance in various countries around the world, serving travel and calendar and planning needs. We’re seeing AI replace the administrative assistant and research departments in some cases. And so our needs for space, the way we use space, continue to evolve to reflect this technology change. And I would say, in this particular cycle, it’s accelerating at a pace that’s faster than we’re normally used to adapting in the real estate industry.”
Moving buildings and acres of land will probably never be as quick as connecting your online storefront to Amazon. But companies that do deal exclusively in real estate shouldn’t overlook the digital tools available to them. If you’re still sending couriers to customers instead of using DocuSign, or if you don’t have systems to speed up mortgage applications, market research, and warehouse logistics, you’re probably just tying up employees with busywork.
3. Build to Sustain Connection
Byron says that many housing developers have been moving away from low-density “McMansions” for years now. Renting is on the rise as young people continue to push back their timetables for marriage and homeownership. Sustainable, energy-efficient housing materials are also growing in popularity. And while smaller towns have flourished in the remote work era, those towns are seeing less “suburban sprawl,” more density, greater walkability, and stronger connection to urban infrastructure, including public transportation.
“I think that connectivity is important,” Byron says, “and I think it will continue to be part of the discussion. We’re seeing transportation and the built environment and the interrelationship between highways, airports, and train modalities come into play on city planning and city connectedness and regionalism. We’re seeing a return to how we interact with nature in our building, how we interact with building materials that make the environment beautiful and interesting. And I think that is a very important consideration in new developments today. We are seeing that we are all connected, and frankly, real estate is the theme that connects us because it’s how we’re going to use space and how we’re going to move around.”
Developers, construction companies, and realtors need to keep tabs on how these trends are affecting their customers’ behavior, from where folks want to live and work to what they want buildings and neighborhoods to look like. CEOs in other businesses should also assess if their company is creating an appealing footprint. Is your main campus a beautiful and energizing place to work? Could WFH replace legacy satellite offices? Can you utilize AI and other tech to reduce waste and improve efficiency? Are you using a regular meeting rhythm and in-person training and team building to keep all employees connected to your culture?
4. Be Active in Your Community and Your Planning
One of the CEO’s top 5 responsibilities is managing key business relationships. That’s especially important at real estate companies, where so many external stakeholders are critical to your success. Every state, city, and small town in the U.S. has its own unique patchwork of government offices, boards, and committees that have to sign off on a new building. Community activist groups might flip from YIMBY to NIMBY depending on the particulars of a project. What you build and how you build it could rally new customers to your brand or ignite a social media firestorm.
“I’m encouraging real estate leaders to take an active role in policy and city planning,” Byron Carlock says. “Architecture and beauty. Green space and public space. Integration of real estate with community living. Living, working, and walking in proximity. Higher density. Don’t become a slave to this idea of adding to the suburban sprawl problem, but look inward to better use of the land that we have. Be better stewards of our environment, better stewards of the sustainability goals that we’ve attached to our industry. We have to be looking forward to how these changes in society translate into our changing needs for different types of space.”
Rising costs, economic uncertainty, political divisions, and changing customer habits will continue to be complicated variables for real estate firms to plan around. But if you’re stuck in “wait and see” mode, you’re going to lose ground — perhaps, in the real estate space, literally.
“A dirty little secret is, real estate’s not that hard,” Byron Carlock says. “You have to satisfy the need for four walls of almost every person, whether it’s a house or an office, or a storage unit, or a distribution facility, or a place to shop when they want to get out and walk down the street and find a few goods. Our industry is one of creating space that’s relevant to the needs of society. We have to keep our eyes on those needs and adapt appropriately while also keeping this macro context in place. My biggest advice is don’t be afraid of the future. And if you are, give us a call.”
Top Takeaways From Byron Carlock
1. Reimagine the space your business needs to optimize the value it delivers.
2. Utilize digital upgrades that will enhance your analog strengths.
3. Connectivity is the future of real estate development and BIG business growth.
Links:
Navigating the Hybrid Work Environment – Strategies for Success – Weigh some of the strengths and weaknesses of hybrid work and determine best practices that will help you build a more modern workforce.
8 Strategic Filters CEOs Can Use to Evaluate Tariffs and Other Complex Situations – If you’re a CEO looking out at this volatile business landscape and wondering, “What’s going to happen next?” then you’re asking the wrong types of questions.
About CEO Coaching International
CEO Coaching International works with CEOs and their leadership teams to achieve extraordinary results quarter after quarter, year after year. Known globally for its success in coaching growth-focused entrepreneurs to meaningful exits, the firm has coached more than 1,500+ CEOs and entrepreneurs across 100+ industries and 60 countries. Its coaches—former CEOs, presidents, and executives—have led businesses ranging from startups to over $10 billion, driving double-digit sales and profit growth, many culminating in eight, nine, or ten-figure exits.
Companies that have worked with CEO Coaching International for two years or more have achieved an average revenue CAGR of 25.9%, nearly 3X the U.S. average, and an average EBITDA CAGR of 39.2%, more than 4X the national benchmark.
Discover how coaching can transform your leadership journey at ceocoachinginternational.com.
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