As CEO of Missouri Land Company, Matt Burgess has been developing commercial and residential real estate for more than two decades. With a unique ability to bring people together for the advantage of all involved, Matt understands the benefits of collaboration. His extensive background in site development, land acquisition, land planning, construction, rental properties, and general contracting has driven exponential growth in communities throughout the United States. For more, visit molandcompany.com or call 573.701.0972.
Demographic Difficulties in Commercial Deals
Why learning to work across generations is key to effective commercial development.
September 10, 2015
The commercial real estate industry is experiencing growing pains that have little to do with economic factors. Baby boomers involved in commercial development are delaying retirement either for the love of the industry or because they suffered a hit in 2008; millennials are increasingly entering the field. A clash of cultures is apparent as millennials become a noticeable force in this industry and commercial developers belonging to the baby boomer generation frequently find themselves at odds with this growing group.
I first experienced this a few years ago when working with my father’s former real estate partner, whom I’ll call “Fred.” We were waiting for the team representing a retailer interested in our commercial space. Fred expected four 60-year-olds to arrive in a Cadillac, smoking cigars; when four 20-somethings got out of a Prius, iPads and laptops in hand, I could immediately sense he felt uncomfortable.
Fred urged me to be patient and pass on the deal. Fred is a baby boomer, and I respect his history and expertise; I’m in my early thirties and he respects my market knowledge, connections, and energy. As we explored other opportunities, we talked about what had transpired and exchanged ideas about the best ways to do business.
And in time, the perfect deal came. This time the folks getting out of the car represented a mix of both generations. It was the synergy between Fred and me — and the time we had invested in getting to know and respect each other’s strengths — that allowed us to bring the first of a large regional grocery store chain to Farmington, Mo. I attribute the success to the effort Fred and I made to address our different approaches to the business. After all, if the key players aren’t on the same page in commercial development, it can cause the deal to fall apart or significantly elongate the process.
What’s the Rift Between These Generations?
Go to your favorite news site and you’ll find many articles exploring the differences between baby boomers and millennials. Everyone from business leaders to corporate culture experts to psychologists are eager to magnify the distinctions between these two populations. Baby boomers are more cautious with budgets; millennials are more technologically advanced; baby boomers tend toward micromanagement; millennials embrace flexibility. These stereotypes drive a wedge between professionals in these age groups. Ironically, in commercial development, these two distinct groups have more in common than not: They are used to getting deals done quickly, albeit in very different ways.
In the 1950s, the commercial development industry was experiencing a resurgence similar to the one we are experiencing today. The gross national product in 1940 was just over $100 billion. By 1955, it had tripled to $310 billion, due partly to a real estate boom fueled by pent-up demand and a surging economy.
During the 1950s and 1960s, commercial development deals were completed with a handshake and a martini. Once the dotted lines were signed, development began and communities benefitted. In 2015, when millennials drive a commercial development deal, texts and e-mails are exchanged until the contract is signed (usually electronically). But the result is the same: Development begins and communities benefit. When the drivers of the deal are of the same era, it’s still relatively fast and effective. Problems arise when individuals necessary to negotiation and deal completion belong to different generations.
How Can These Two Groups Better Work Together?
Increased collaboration between baby boomers and millennials on commercial development deals is essential. Here are the top five tips our team keeps in mind when dealing with a diversified partner and stakeholder list:
- Communicate Preferences: At the start, convey your preferred method of communication. The awareness of preferred work styles is key to bridging generation gaps. When communications preferences are known, less time is wasted waiting on responses.
- Understand and Appreciate Stakeholders: Take the time to learn why each team member is involved in the development deal. This will make you acutely aware of each individual’s value, decrease frustration, and foster an environment of respect.
- Be Humble: Do not let ego get in the way of progress. Respect each individual’s contributions.
- Build a Relationship: Invest time with those involved in the deal outside of the project. When you begin to foster a more personal relationship with an individual, you gain a broader perspective about their approach.
- Know When To Walk Away: Sometimes a deal goes south. It could have nothing to do with the personalities (or ages) of those involved, or it could have everything to do with those variables. A smart commercial development professional knows when to walk away in order to save time, money, and energy.
Commercial development deals can take nearly twice as long when the parties involved approach the project in conflicting ways. When deals are prolonged, communities and their inhabitants suffer. During the time it takes to build that retail strip or community center, people are out of work and living without those local revenue-generating resources. As this changing of the guard begins to slowly take place throughout the next decade, the efficacy of commercial development deals will depend on the ability of these two groups to better adapt, communicate, and collaborate. The health of our communities — and our economy — depend on it.