Recognize the Urgency
While the popularity of the ‘Succession’ television show has many considering succession planning (SP) for the first time, do not make the mistake of thinking that it does not apply because we’re in commercial real estate (CRE). At many commercial real estate firms, Baby Boomers naturally hold leadership positions due to their age and experience – many of whom pushed back retirement plans to remain with their firms during the challenges of COVID and then into the follow up CRE bull market that began in January 2021 and lasted through May 2022. The unprecedented pace in the rise in interest rates brought this brief period of growth to swift conclusion and quickly thrust the industry into its next crisis. These events alone should serve as a warning. But when combined with this summer’s “Peak 65” milestone, they will likely result in the highest number of CRE professionals leaving the industry. Be wise and be prepared.
Defined as the maximum number of professionals reaching the traditional retirement age of 65, Peak 65 is a very real concern for every industry. And as we look at it through the real estate lens, it is imperative that we do not simply focus on those in “Peak 65” – we must apply the concept of SP to all levels. Despite many viewing SP as a C-suite initiative, it is critical that CRE leaders view SP across the entirety of the organization. SP can and should be applied to a one-year analyst, a boomer asset manager nearing retirement age, and yes, all the way up to the C-suite.
CRE firms need to approach SP as an ongoing activity and process with no start or end date, because SP is not a one-time occurrence.
Succession planning… the words are simple but actually developing a plan can be intimidating to many CRE firms. Perhaps the words evoke some feelings of uncertainty, fear, or simply represent a task of the future that can be addressed when there is more time. Yet SP should be at the top of their list, despite the litany of challenges we face in 2024.
CRE firms need to approach SP as an ongoing activity and process with no start or end date, because SP is not a one-time occurrence. SP is about helping a CRE firm confirm that it has the talent on hand to fill key positions. And it is about providing assurances to investors, capital partners, shareholders, and employees that the firm is more than just one individual. By prioritizing succession planning, CRE firms demonstrate their commitment to sustainability, adaptability, and long-term growth, thereby attracting top talent and reinforcing their organizational strength. Where will your firm be for Peak 65?
