Below, you’ll find a link to a well-known memo from Trammel Crow that dives into the lessons learned from the real estate market crash in the 1980s. Since our current market is facing another major disruption, I thought it would be appropriate to look back at what mistakes this famous developer made, and what lessons we can learn that still apply today.
Here are a few of my takeaways:
— The market is always changing – Although you can’t fully prepare yourself for the exact change heading your way, you can take some steps to better position yourself for that change. Trammel Crow prepared for a market change, raised money, and cut costs where needed.
— Trammel Crow’s consistent success made them feel untouchable – They did not do enough research on the current market at the time. They could have cut debt, rents, and projects to meet the market standards but they did not. Instead, they were too lenient on credit requirements and ultimately, those spaces that went bankrupt or failed hurt their money.
— No matter what the market looks like, you must have a good team – With a good team, you can delegate other tasks and focus on what’s really important – making deals happen during a market crash.
The market is forever changing — for better or worse. Looking back on previous crashes helps us learn a lot about what we should do as well as what we shouldn’t. If you want to get our thoughts on your best move in the current market, give us a call.
Andrew Cheney, CCIM, CRE, SIOR
602.954.3769
Click the link HERE to read the full article.
