One of the basic truisms of modern social psychology is that the ideas we hold as individuals do not originate from nothing; everything we believe comes from somewhere else.
Some experts suggest that some of the most pervasive ideas—including those we value in personal and professional contexts—come from our immediate communities, whether we’re aware of it or not. Today we know this concept better as “groupthink”—a concept originally coined in the 1950’s by sociologist and urbanist William Whyte, author of The Organization Man, to explain how our shared desire for harmony in a group can often lead us to collectively reach ideological consensus, regardless of its rationality or irrationality.
Groupthink is usually leveraged as a critique of mob mentality on the internet, but that’s only because social media allow us to observe the phenomenon in real time.
Meanwhile, we like to think of our ideas about business, corporate culture, organization management, and investment philosophy as sui generis; not subject to the same irrationality that seems to dominate popular discourse.
But even the real estate industry—one powered by leagues of smart people with innovative ideas—has its own tendencies towards groupthink (especially if the past twelve years of Great Financial Crisis retrospectives have taught us anything). The pandemic has therefore served as a gut check on the established orthodoxies of our business.
Conscious investors and owners are taking a deeper look at the emergent and intersectional fundamentals that will generate long-term value as the world gradually emerges from convergent global crises into the “new normal,” whatever that might be.
What we see in this newest issue of Summit Journal is less group think and more group problem solving. The authors here have eschewed standard predictions or calculated optimism about the standard asset classes—office, retail, residential, and industrial—and outlining strategies for movement into alternative sectors.
Warren Wachsberger, Josh Katzin, and Corbett Kruse of AECOM Capital; Indraneel Karlekar of Principal Real Estate; David Wertheim of Invesco Real Estate all explore gateways into specialty sectors, while Jerry Speltz of Barings Real Estate; Lori Mabardi, Emily Chadwick, and Eric Enloe of JLL; William Maher, Ben Maslan, and Cecilia Galliani of RCLCO explore the specifics of some of these sectors, and what areas investors need to watch.
Additionally, Tal Peri of Union Investment explores new work habits, Isabel Ruiz-Halter of Sheffield Haworth discusses talent parity for business leaders, and the works of Jim Clayton et al.; Owen Woolcock and Rajeev Ranade; and Frances Mennone and Bruce Katz talk about the larger environmental and social issues that will continue to upend groupthink in the coming years.
Taken together, the ideas discussed in this issue do not represent a new consensus—nor should they. Value is not derived from consensus, but from ingenuity. And as we write in our summation of the AFIRE 2021 Mid-Year Pulse Survey, this sort of thinking is undoubtedly warranted during these uncertain times.
About the cover: A former storage warehouse at a once-massive manufacturing facility outside Chicago, Illinois sits vacant and awaits adaptation. Photo by instagram.com/benvanloon.jpg.
NOTE FROM THE EDITOR / GROUPTHINK VS. GROUP COLLABORATION
AFIRE | Benjamin van Loon
MID-YEAR SURVEY / CHECKING THE PULSE
No matter your age or experience, 2021 has shaped up to be a year that no one can forget. Findings from the AFIRE 2021 Mid-Year Pulse Survey detail a cautious road ahead.
AFIRE | Gunnar Branson and Benjamin van Loon
CLIMATE CHANGE / REASSESSING CLIMATE RISK
The commercial real estate industry may not yet fully grasp the actual relationship between climate risk and asset pricing and value. But the knowledge is coming fast.
York University | Jim Clayton
University of Reading | Steven Devaney and Jorn Van de Wetering
Kinston University | Sarah Sayce
UNEP FI | Matthew Ulterino
NON-TRADITIONAL / THE ALLURE OF SPECIALTY SECTORS
Real estate investments have historically coalesced around common property types—but it may make sense for investors to reconsider specialty property sectors in the post-COVID world.
Invesco Real Estate | David Wertheim
NON-TRADITIONAL / NON-TRADITIONAL IS GOING MAINSTREAM
The mainstreaming of nontraditional property types is well on its way within institutional investing, which will materially broaden the real estate investment universe.
Principal Real Estate Investors | Indraneel Karlekar, PhD
DIGITAL INFRASTRUCTURE / DIVERSIFYING INTO DIGITAL
As investors look for sustainable sources of inflation-protected yield, real estate investment is increasingly blurring into a wider range of “digital” real asset investment strategies.
AECOM Capital | Warren Wachsberger, Josh Katzin, and Corbett Kruse
LIFE SCIENCES / TAPPING INTO BIOTECH
Over the past two decades, the single-family rental industry haLife sciences real estate has been a “hot” property type for the past decade—and even more since the pandemic. Will all the capital targeting the space be placed where it needs to go?
RCLCO | William Maher, Ben Maslan, and Cecilia Galliani
ESG + CLIMATE CHANGE / HIGH-WATER MARKS
Interest and excellence in ESG performance is becoming increasingly critical to portfolio strategy. So with sea levels on the rise, how can portfolios stay above water?
Barings Real Estate | Jerry Speltz
ESG + NET-ZERO / VALUING NET-ZERO
With more tenants focusing on environmental targets, the burden to reduce direct emissions places increased pressure on investors, who are at a pivotal moment in ESG strategy.
JLL | Lori Mabardi, Emily Chadwick, and Eric Enloe
ESG + FAMILY OFFICE / FAMILY OFFICES AND ESG
As sustainable investing continues to grow in popularity, family offices have taken note—and understanding ESG targets and regulations will be key for longterm performance.
Squire Patton Boggs | Kate Pennartz and Rebekah Singh
DEBT / WHY DEBT, WHY NOW?
Debt funds remain a comparatively small part of the real estate investment market, but they have been gaining in prominence in recent years.
USAA Real Estate | Karen Martinus, Mark Fitzgerald, CFA, and Will McIntosh, PhD
MIGRATION / MIGRATION IN REAL TIME
As the public health situation started to improve in early 2021 and the economy reopened, did migration flows change too—and what if we are able to answer this in real time?
Berkshire Residential Investments | Gleb Nechayev
StratoDem Analytics | Michael Clawar
URBANISM / DOWNTOWN DISRUPTION
The pandemic-driven changes to downtown areas and central business districts is changing the geography of institutional investment. What else changes because of this?
Drexel University | Bruce Katz
FBT Project Finance Advisors + Right2Win Cities | Frances Kern Mennone
WORK-FROM-HOME / CHOOSING FLEXIBILITY
Employees are increasingly demanding flexibility and choice for where (and when) they work. What strategies can landlords implement to adapt?
Union Investment Real Estate | Tal Peri
TALENT AND RECRUITMENT / TALENT PARITY
To be better prepared for future risks, firms need diverse talent. So is the goal of 50% female representation achievable in global real estate investment and asset management firms?
Sheffield Haworth | Isabel Ruiz
CLIMATE CHANGE / PREDICTING THE CLIMATE FUTURE
We are all invested in the cities, assets, and infrastructure of tomorrow, even if we might not live to see the ten largest cities in 2100. But understanding climate change can get us closer.
Climate Core Capital | Rajeev Ranade and Owen Woolcock