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Op/Ed

Decades in the making, real estate’s innovation propels industry through pandemic, into the future

(EDITORIAL) Our minds are plagued with uncertainty as the pandemic reshapes all sectors, but this unique insight helps us to see the clear path forward.

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Bob Goldberg, CEO at The National Association of Realtors

In unprecedented times, people reflexively become gripped with fear and trepidation, but industry leaders can assess the bigger picture and not only take stock, but forecast what emergence will look like. The following guest column from Bob Goldberg, CEO of the National Association of Realtors® does just that – he takes stock of today’s realities and offers unique insights into changing the status quo.


Commercial real estate, an industry many feared would suffer broad, lasting distress as a result of the pandemic, fared better in 2021 than just about anyone expected.

The multifamily market, in fact, had a historic year, as the National Association of Realtors®’ Commercial Market Insights Report pointed out last month. Vacancy rates hit 35-year lows and median asking rent grew at a record pace amid a recovery in household formation.

Meanwhile, demand for U.S. industrial space continues to significantly outpace supply, and NAR economists expect the demand for commercial real estate to strengthen throughout 2022.

Given where we were less than two years ago, it’s natural for us to ask, how did this happen?

How, when offices were left vacant, urban cores were abandoned, and even more existing business activity turned online, has commercial real estate survived, or, in some cases, thrived?

The reality is that real estate – both commercial and residential – has been evolving alongside a changing market for decades.

Innovations which had been years in the making were perfectly positioned and perfectly timed when the pandemic began. New, cutting-edge technologies allowed families to relocate, transactions to close, and commerce to continue even as much of the nation ground to a halt in early 2020.

Indeed, without the broader market activity that has been catalyzed by our industry – with home sales hitting 15-year highs and demand for multifamily and industrial real estate booming – this period of relative economic prosperity would have been more distant, more elusive. 

As is the case for most things in life, hard work and sacrifice are to thank. But we can also credit a principal that is perpetually in focus at NAR – innovation.

Renowned economist Theodore Levitt once said that creativity is thinking up new things, while innovation is doing new things.

It’s been American real estate’s collective, remarkable ability to continue doing new things that has made this revival possible, a phenomenon which has benefitted consumers everywhere along the way.

Through our tech growth program, REACH, and our association’s investment arm, Second Century Ventures (SCV), NAR has been on the cutting edge of innovation in real estate technology for more than a decade.

Some of the more than two dozen companies from the REACH portfolio which were instrumental in the industry overcoming lockdowns and social distancing measures include BoxBrownie.com and Immoviewer, which specialize in 3D 360 tours and floor plan renders; UbiPark, a contact-free smart parking solution; and Loop&Tie, a bespoke gifting platform that helps real estate professionals engage with clients and employees from afar.

Overall, SCV has allowed Realtors® to seed some 160 technology companies that engage in everything from digital title and escrow transfers to virtual staging tools and automated marketing campaigns. E-signature services provider DocuSign and remote notarization platform Notarize are a few of the most recognizable entities, but a host of others have imagined the revolutionary resources which will soon be commonplace in our industry.

Residential markets reaching 15-year highs in the midst of a pandemic without tools like these is simply unimaginable.

In the commercial sector, too, these innovations have proven invaluable. Some of the 30 new technology companies supported by REACH Commercial which have been leading the charge these past two years include Lulafit, Pear Chef, and Cove. Indeed, just months after the pandemic broke, Cove launched new software platforms to help tenants and building owners return to work safely once stay-at-home orders were lifted.

As Bisnow highlighted at the time, these innovative new resources were created to help companies track the occupancy of their spaces, set cleaning schedules and conduct health checks, while their employees could reserve desks, stagger arrival times, and form elevator queues.

Looking ahead, we must retain the aptitude for progress that propelled real estate through COVID in order for our industry to thrive through the seemingly endless string of market transformations.
 
One of the true bright spots in an otherwise tragic circumstance is that this pandemic has made people more aware of the places and spaces we occupy. How all of us live and work in these spaces has changed forever. Naturally, this new mindset has generated a renewed focus on sustainability.

Real estate’s motivation to engage is obvious.

The First Street Foundation, which developed the Flood Factor tool employed on realtor.com® and elsewhere to provide flood risk assessments for hundreds of millions of properties, engaged on a recent study which estimated structural damage from U.S. flooding will exceed $13 billion in 2022.

More severe flooding events and property damage are the most widely known consequence of climate change, but its impacts do not stop there.

CoreLogic’s 2020 Wildfire Risk Report reported more than 1.9 million homes – with an associated reconstruction cost of almost $650 billion – were at elevated risk of wildfire damage. The regions most at risk, perhaps unsurprisingly, are metro areas in California. 

NAR offers grant resources to state and local Realtor® associations in effort to make communities more resilient, encouraging new and unique strategies that foster sustainability and combat the potentially damaging impacts of climate change. In Oregon, for example, the Rogue Valley Association of Realtors® – a region devastated by wildfires in recent years – used a Consumer Advocacy grant from NAR to coordinate a two-day training and certification program for home inspectors conducted by the National Fire Protection Association.

Henry Ford is claimed to have noted that if he had asked his first customers what they wanted, “they would have said faster horses,” rather than the automobile. Whether Ford said this or not is today the subject of some digital disagreement. But that’s irrelevant.

Truth is, we often don’t know what we need until we’re faced with a moment of distress or distraction or despair. A once-in-a century global pandemic, for example.

No one knows the future, and very few know what they will want at any, undetermined point in it. All we know for certain is that the future will be different than today.

And if we’re not changing the status quo, we might just find that we’ve become it.


Bob Goldberg is CEO of the National Association of Realtors®. Since assuming the role in August of 2017, Bob has overseen transformations that have positioned NAR as real estate’s leading figure in the fight for diversity and inclusion; the industry’s primary driver of technological innovation; and as an association lauded for a genuine, unwavering commitment to its members. As part of the responsibility NAR has to more than 1.5 million REALTORS® worldwide, Goldberg has overseen the formation of a number of initiatives which have influenced the market and proven immensely valuable to NAR’s general membership.

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Op/Ed

Kakeibo: What we can learn from the Japanese art of spending wisely

(EDITORIAL) If regardless of how much money you make, it seems like you’re always short a buck, take a hard look at how you are spending. It could save you a lot.

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control your spending

Raise your hand if you have cash in your wallet.

What is a wallet you ask?

I jest. I know you know what a wallet is. (I hope.) But, sometimes I wonder if cash will go the way of the rotary phone. Seems most folks I know use debit cards, Venmo or their phones to pay for things nowadays.

Ever notice when you go to the store and have a debit or (worse) a credit card at your disposal, your plan to spend $20 ends up more like $50-$100. For example, anyone who shops at Target knows that when they ask you at the checkout, “Did you find everything you needed,” the answer is “ugh… Yes, and then some.”

Living in a plastic economy has made us less cognizant of how we spend money. But, leave it to the Japanese to have a system for putting the thought into buying. It’s called Kakeibo (pronounced kah-ke-boh) and it translates to “household finance ledger” and it’s something most Japanese folks learn to use from the time they are wee children.

The system began in 1904 and was “invented” by a woman name Hana Motoko (also known as Japan’s first female journalist), according to an article on MSNBC. The system is a no-frills way of approaching finances, whether personal or business.

Now, some folks are great at keeping a budget and knowing where the money is going. My mom, for example was the best bookkeeper. Unfortunately, her skills with money didn’t pass down to me. So, I actually purchased a Kakeibo book to try and get my finances in better shape.

You don’t need some special book (save your money), though you can find lots of resources online, including these downloadable forms, but in actuality all you need is a notebook (preferably one to take with you) and a pen. No Technology Required.

If you have been spending money and not knowing where it is going, then it’s going to take some work to change your habits around money.

In her article on MSNBC, Sarah Harvey says what makes Kakeibo different than using an Excel spreadsheet or budget software is the act of physically writing purchases down – it becomes a meditative way of processing spending habits. “Our spending habits are deeply cemented into our daily routine, and the act of spending also includes an emotional aspect that is difficult to detach from,” Harvey says.

As a business owner or entrepreneur, it is also easy to get sucked into believing you have to have new technology, systems and bells and whistles that maybe you don’t need – just yet. Spending goals for a business, just like a personal budget, are important if you plan to stay on track and not lose sight of where your money is going. Lord knows the money flies out the door when starting any new project.

Based on the Kakeibo system, there are some key questions to ask before buying anything that is nonessential (whether for your home or business):

  • Can I live without this item?
  • Can I afford it? (Based on my finances)
  • Will I actually use it?
  • Do I have space for it?
  • How did I find the item in the first place? (Did I see it in an IG feed? Did I come across it after wandering into a store, am I bored?)
  • What is my emotional state today? (Calm? Stressed? Celebratory? Feeling bad about myself?)
  • How do I feel about buying it? (Happy? Excited? Indifferent? And how long will this feeling last?)

For Harvey, who learned about Kakeibo while living in Japan, using the system forced her to think more about why she was making purchases. And, she says it doesn’t mean you should cut out the joy of buying, just possibly making better choices when needing retail therapy on a crappy day. She found the small changes she was making were having a positive impact on her savings.

How to be more mindful when spending:

  • See something you like, wait 24 hours before buying. Still need it?
  • Don’t be a sucker for sales.
  • Check your bank balance often. Can you afford what you’re buying?
  • Use cash. It’s a different feeling having that money in your hand and letting it go.
  • Put reminders in your wallet. What are your goals? Big trip. Then, do you really need new headphones, a bigger TV, a new iPhone, etc.
  • Pay attention to what causes you to spend. Are you ordering every monthly service because of some Instagram influencer or, because of some marketing you get online. Change your habits, change your life.

Using the Kakeibo system of a notepad and pen or a Kakeibo book for the process can help you identify goals you have for the week, month and year and allow you to stay on track. Remember, cash is still king.

This story was first published here in January of 2020.

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Op/Ed

What we can learn about leadership from other cultures

(EDITORIAL) There are those who enjoy “being in leadership” and then, there are those that are more interested in actually leading. Let’s break it down.

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Women typing on laptop representing leadership.

I don’t believe in leadership… really!

In my experience, more often than an example of someone exhibiting a worthy strategy for advancing the goals of an individual or group, I’ve found “leadership” to be a buzzword translating roughly to a skeevy sales pitch that sounds something along the lines of: “Concerned you lack both ideas and skills? Don’t worry! Here are social strategies you can use so no one will notice your absence of merit until it is far, far too late.”

At best, it’s a marketing term used to take advantage of insecure people who actually do have good ideas or solid skills.

At worst, and let’s be honest here; when I wrote my little screed about leadership, how many of you immediately had a face and/or name of someone in mind?

Possibly more than one, even?

It’s OK.

This is a safe space.

Egalitarianism and hierarchy

Imagine my surprise, therefore, to come across a piece on leadership with real value.

Over at the Harvard Business Review, Erin Meyer has built a useful metric for leadership styles. Her purpose is to establish the different expectations that exist for business leaders in multiple cultures (though the metric is applicable as a trans-cultural concept as well).

The two-axis of her graph is “egalitarianism” and “hierarchy.” “Egalitarianism” tracks the degree to which employees expect involvement in the decision-making process.

“Hierarchy” reflects the degree to which employees defer judgment (and responsibility) to their organizational superiors: think top-down vs. bottom-up.

The intersection of the two creates four strong categories, all of which need to be in a good leader’s repertoire, which I’ve listed for you below:

High egalitarianism: top-down

I start with this one because I’m from the USA, and this is us. American employees on the whole expect to be involved in decision-making, especially when the decisions involve them.

That said, for all our open-plan offices and open-door policies, let’s be real: we’re a top-down bunch. Ultimate responsibility still rests with El Jefe, who makes the call and takes the consequences thereof.

In that environment, employees (should) get input, but once the call is made, they’re expected to go along with the decision and adjust to its consequences. A good leader in this setting makes sure everyone is involved in the process.

The cutoff in responsibility that occurs when the decision is made can lead to discontent if an employee feels insufficiently involved since they’re expected to live with consequences of a decision they don’t feel they were part of t. Conversely, depending too much on employee input can give employees an impression of “weakness” on the part of the leader.

Low egalitarianism: top-down

By the heading, this probably sounds like the widely admired “Do What I Say, peon…” approach to leadership.

It isn’t, really.

Rather, it reflects a different distribution of responsibility, one that places a distinction between decision making, which is seen as the sole responsibility of the designated leader, and implementation, which is what the employees are for.

Meyer memorably cites an American company working with a Chinese one in which the management was shocked to learn their egalitarian management style had led to them being perceived as not just incompetent, but arrogant, since what they saw as open-minded suggestion-box management, their Chinese employees perceived them as failing to do their jobs, then acting as if they’d done their employees a favor. Meyer also sorts major business cultures like Russia and Brazil into this category.

Obviously, in a setting like this, a responsible leader has to make clarity a priority. The process is vital: here’s where your responsibilities fall, here’s where my responsibilities fall. In addition, obviously, no leader can function without input.

Incorporating contributory opportunities into a rigorous decision-making process avoids misplaced egalitarianism while still involving workers with the changes that will affect their lives.

High egalitarianism: bottom-up

It’s a decision by debate, more or less. In this environment, the leader does less “leading” in the “buzzword” sense and more facilitating, encouraging everyone involved with the decision and likely to deal with its consequences to make their voice heard.

Meyer notes that this tends to be the decision-making process that takes the longest (go figure), but also one that can lead to high employee morale and a clear sense of involvement.

A successful leader in this setting does their best work making sure every view is heard and, as decision-making time nears, everyone is on board.

Good news for would be leaders: this business culture is characterized by the least pushback after a decision is made.

Low egalitarianism: bottom-up

This is characteristic of business cultures where high regard for formal authority interacts with an involved, informed, worker culture.

Authority still rests with the person at the top of the perceived structure, but the decision itself is made in groups, with the authority figure implementing and taking responsibility for the decision reached by consensus.

This can be a tough environment for would-be leaders, combining as it does a high degree of responsibility with comparatively little control. The best leadership strategy in this setting is a “first among equals” approach, guiding discussion without dominating it and taking responsibility, and exerting influence when making the decision and managing its consequences.

Erin Meyer’s work is a masterclass of serious assessment of leadership in the workplace. It’s an analysis, as well as a how-to, and repays a close look by anyone who is less interested in “being a leader” and more interested in actually leading.

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Op/Ed

4 categories your business needs that contribute to a winning culture

(EDITORIAL) Achieve a winning business culture by checking in on four important categories that are time-tested and proven to improve your company.

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Woman writing in journal representing working on a winning business culture.

When it comes to the term “business culture,” we all have a tendency to throw it around without a precise definition that fits our respective companies specifically. It can be argued that some type of culture will form, regardless of the emphasis you put on it – that’s just human nature. But, how can we check in to make sure that the business culture we’re exuding is an effective one?

A few months back, I was told about a simple way to test your business culture, in a method developed by Franklin Covey. In order to have a winning culture, a culture must have organizational focus and execution shining from great leaders and effective individuals.

With this, there are four categories that contribute to a winning culture. These include: distinctive contribution, engaged team members, loyal customers, and sustained performance.

You may be reading this and going, “well, no duh,” but let’s think about this for a second. Even if you can explain the factors that would make up a strong culture, does that mean that your company has them?

In terms of distinctive contribution, it’s important to look past what your company does on a day-to-day basis and see what you’re doing to make a difference in the world. Does your company give back to the community? Does your team feel proud to work for a company that does good for others?

Speaking of your team members, do they seem to be engaged? So many people go into work with a lackluster attitude and that has a poor effect on their output.

Are you doing things within your culture to make your team feel engaged and productive? This can range from weekly meetings designed to brainstorm and hear everyone’s opinion, to programs that award hard work with fun incentives.

When you have team members that are engaged and hardworking, they will display this to the public and will likely help in attracting loyal customers. Customers can tell when a company and its team are being genuine, and that carries so much weight in terms of retention.

This leads to the final aspect of sustained performance. You must be present and consistent with your customers in order to give them repeated satisfactory performance time and time again.

It’s likely that our business cultures can all enhance in one or more of these categories.

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