The CRE market is in a downturn — How can you stay resilient?

Market downturns are common in CRE as well as cyclical but provide various opportunities and strategies to acquire distressed assets at a discount or acquisitions under more realistic or market adjusted price points. In doing so focus on markets and property types that you have traction and experience while assessing the overall risk and potential drag on your exiting CRE portfolio. In navigating market downturns focus on what is required to sustain your existing CRE portfolio addressing adequate reserves and capex that may be necessary to maintain a more marketable property type and market share. In doing so take advantage of the various government sponsor funds that are available for ESG/Green Bonds/ and IRA grants and incentives. Be realistic and forward thinking in your asset management forecasts especially as it relates to opex projections in assessing notable escalations in insurance coverage, labor, material, real estate taxes, and interest carrying costs or resets over the next 12-24 months. Formulate specialized teams and talent that can collectively collaborate on the various risk, operational, and management requirements necessary to sustain cash flows vs. a silo approach to management/ownership. Invest in IT, talent pools, and expand sponsorship relations on the debt and capital stack. Forecasts should be realistic and adjusted for continued downside risk and unrealistic assumptions of a near term market correction or reduction in interest rates. Learn from prior market downturns the dos and don'ts and be proactive vs. a wait and see approach.