The best real estate opportunities don’t follow the crowd. In 2008, those who saw past fear and acted on real insight reaped the rewards. Today’s market is full of noise—AI, data centers, aging demographics. But where are the real anomalies. Don’t let conventional wisdom hold you back.
2025 Is Not 2008, But There Is A Lesson …
It was after the market crash of 2008-2009, and I was in a meeting of investors to discuss potential opportunities in real estate. An abrupt turn from one of the strongest markets in history left many of us disoriented and in shock. The unspoken norms that supported decision-making had vanished: A banker told me about the great low interest rate at which he could not make a construction loan. Analysts predicted it would be many years – even a decade – before the glut of unsold condominiums would clear the market.
One participant in the meeting suggested this was a good time to invest in apartment development, particularly urban infill sites where condominium conversion might be an alternate exit strategy. A board member from a major apartment REIT impulsively laughed out loud. The room buzzed in agreement: Imagine the folly of new apartment development when so many were struggling. Most in the room believed they had reached that conclusion through their own insight. It was obvious to everyone. And hearing that their own conclusion was shared by a respected executive simply provided a form of confirmation bias.
“The art of being wise is the art of knowing what to overlook.”
Diogenes (c. 350 BC)
Insight: What Did Some Know That Others Did Not?
Of course, those who invested in that perilous time profited sooner and in far greater measure than anyone expected. What did they see that most people missed? Some anomalies had appeared. Cap rates were higher than mortgage interest rates, creating “positive leverage” for the first time in many years. Housing starts plummeted as foreclosures spiked – an expected supply/demand reaction – but perhaps the lower level of housing starts also indicated a reduced level of competition among those few builders who still had access to capital. Some executives identified discounts to replacement cost, particularly among foreclosed and distressed assets, but even that wasn’t enough to convince many investors.
Clearly, the conventional wisdom had been wrong. It was safe to assume that a depressed market would be the new norm. But just a few years earlier, it had been safe to assume an ever-rising market would continue.
Leadership Is Not Enough
Who were the leaders in that post-crash era? Were they those who recognized new opportunities? Not always. Some leaders persuaded others to steer clear of “toxic” assets. They missed the opportunities, but many of those leaders nonetheless do well in the corporate world. They are able to cultivate followers with a risk-averse approach to business. Many did see the opportunities but were unable to execute. They lacked the necessary leadership skills. A few visionaries had the ability to act. Those leaders were able to overcome the odds and convince their colleagues and partners to seize the post-crash moment. If leadership is simply the ability to convince others to follow, then leadership itself is neither positive nor negative. Insightful leadership creates value. Identifying the best executives and building the strongest team is the single most important task of any board. How do you distinguish what is bold from what is reckless? Unfortunately, the middle course of risk aversion is often simply “less bad” than being reckless.
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What Makes You Smarter?
What’s the conventional wisdom today in real estate? Data centers and energy infrastructure are in demand. How will tariffs, the interest rate environment, and a possible recession affect each real estate sector? What about construction loans maturing in 2025? One banker tells me he doesn’t see a problem. We are awash in pre-conceived notions about work-from-home, the death of brick-and-mortar retail, artificial intelligence, the silver tsunami of aging Boomers, and so much else in a fast-moving world. How do you discern true insight from conventional wisdom? What are the anomalies today?
Reaching The Next Level
Many real estate executives claim to deliver “superior risk-adjusted returns.” It has become a cliché, hasn’t it? Or is it an excuse for substandard returns? Are you encountering headwinds on your path to growth or struggling to spot hidden opportunities? Don’t let conventional wisdom hold you back. Contact us today to learn how Boyden can help you overcome challenges, navigate uncertainty, and unlock your organization’s full potential. Surround yourself with a team truly capable of uncovering and executing on good ideas
