“Unprecedented” doesn’t come close to describing the upending of our personal and business lives in 2020. It’s understandable if you feel like a boxer who just took a series of body blows, and now you just want to make it to the end of the round without toppling over.
But it’s time to think beyond survival. By now we’ve had enough time to process COVID, and then react, adjust and formulate strategies in response. Now let’s look ahead to the future of our redefined business world, and figure out how to get back to succeeding.
From my point of view, it’s the same as in any other economic storm or crisis environment: It’s those who build a deep understanding of the situation and then creatively apply their expertise who will succeed.
We’ve learned to survive in a COVID world—now let’s focus on thriving.
No one had a plan for this
Let’s acknowledge the obvious: We weren’t ready for this.
The commercial real estate industry has certainly seen its share of booms and busts. Over the years the savvy operators have created playbooks for how to deal with all manner of economic trends—but nobody had a game plan in place for coronavirus. And this crisis impacts everyone, up and down the tiers of the industry: It’s not just bad news for the owner, or the manager, or the tenant or the customer; the impact and fear are being felt on every level. So property management companies like NAI Elliott are thrust into the role of rising above the turmoil and providing answers… to everyone.
Here are a few examples of the negative implications for just the ownership level. The pandemic is:
• Not covered by insurance
• Not mentioned in lease contracts
• Not anticipated in mortgage documents
• Not anticipated in cash-flow projections or needs
So landlords were pretty much blindsided. But the fallout extends right through the management, tenant and customer levels. And every impact creates more questions: What if there’s another wave of the pandemic in the fall and winter? And even if we’ve seen the worst of it, “consumer PTSD” is a huge factor. When will confidence return to bring back normal cash flow?
Property managers are MVPs
Now more than ever, having the most proactive, involved and savvy property management team will be a key to recovery. The best property managers are used to becoming experts on the fly, out of necessity—even when they’re navigating unknown terrain without a road map, like we are right now.
Here’s one immediate lesson our team has learned: You have to completely rethink your systems in order to continue attracting and retaining clients. This means breaking down every facet of operation and maintenance, looking at how it’s impacted by the virus, and then determining how to adapt it so retail customers return and office users feel safe. Here are just a few quick examples:
• High-touch areas need to be cleaned thoroughly and frequently.
• Airflow and filters may need to be adjusted or even replaced/upgraded.
• Signage and traffic flow limits/considerations are crucial.
• Any opportunity to go touchless should be explored
The pandemic is affecting everyone’s bottom line. Real estate values are based on property income, so if customers buy less and therefore tenants can’t pay rents, it’s not just a matter of cash flow; it means a hit on the market value of the property. Property management fees are typically based on a percentage of revenues collected, so in the same situation we’re making less money—even as we’re working harder to address all the virus considerations and logistics. And, as a result of this top-to-bottom cash squeeze, over-leveraged landlords and tenants alike may be sunk. No one escapes unscathed.
It’s a textbook example of trickle-up economics: The customers aren’t coming in, so the tenant can’t pay the rent… so the landlord can’t pay the mortgage and taxes… so the bank defaults on the loan… and the government puts a lien on it.
The one constant in any environment
Let’s get to the crux of the matter: What can you do to get through to the other side of this? One way this situation is no different than any other is that communication is central to dealing with it successfully.
An essential element of crisis communication starts internally: We need to be compassionate. It’s absolutely true that we’re all in this together. This pandemic is not affecting just one segment of our population, or one level of commercial real estate; everyone is struggling to find answers. So keep compassion in mind in all communication.
And then communicate with landlords, tenants, vendors and anyone else impacted by the changes you need to make, including retail customers. Develop a plan for your short- and long-term COVID recovery that includes every stakeholder you can think of. Make that plan prompt, careful and complete, and then execute it with all-encompassing communication. Letting all the players know you have a solid playbook for success will give everyone an emotional boost and foster buy-in and collaboration.
Updating our approach
At NAI Elliott, we immediately started learning everything we could about the pandemic; increased knowledge is always the first step to recovery. We quickly gleaned a few key things.
For one, the partnership between landlords and tenants is more important than ever; the best route forward is to emphasize mutual needs. This partnership goes far beyond a legal contract; everyone has a stake, and working together will mean a better solution for everyone. We know from recent experience that there’s a deep satisfaction in finding mutual solutions, and then doing the work together.
And a positive of this crisis is exercising our creativity in new ways. We’d rather not be here, but it has spurred us to develop some new ways of getting things done:
• We’ve accelerated our adoption of e-commerce functions.
• We’ve reorganized our work processes to adapt to telecommuting.
• We continue our process of moving away from paper-based systems, turning to procedures that are effective for remote work but still strongly secure.
How we’re all thriving
Having our lives thrown into the tumble dryer has reminded us of the good things that underlie our day-to-day operations and success, as well as our client relationships. These foundational elements don’t go away during a crisis. Yes, some of the details of our work are very different. But fundamentally it’s the same.
For example, staff fatigue is a very real thing; we’re all doing our normal jobs, plus more… and from home, with our kids, pets and distractions. But guess what? Collaboration has carried the day, even if it’s via a computer screen or a phone call—reflecting our long-established approach of pooling our resources instead of working as soloists.
When the need for changes became apparent, we promptly shifted our business to virtual-based, and let everyone know exactly what was changing, and what was not. The nature of how we work with each other is the same; the mechanisms have changed. We’ve consciously emphasized this with everyone, and we feel a newfound appreciation for how we work together to accomplish all our goals.
Our team and our clients are reaping the benefits of the NAI Elliott culture we’ve carefully planned, embedded and nurtured: We’ve learned that compassion, caring and kindness can carry us all through this time—with our camaraderie, productivity and senses of humor still intact.