For this Field Note, we wanted to share a few thoughts on operating in a slower real estate market, and how periods like this tend to fit into the broader cycle.
Over the past couple of years, higher interest rates, reduced lending availability, and slower transaction activity have made the market feel more difficult than it did during the years immediately following COVID. Deals take longer to close, leasing decisions take longer to make, and buyers tend to be more cautious when evaluating new investments.
While these periods can be frustrating in the short term, they are also a normal part of every cycle. Real estate rarely moves in a straight line, and markets that feel slow today often create the best opportunities for the next phase of growth.
One of the advantages of our development-driven approach is that we are not dependent on constant transaction volume to produce results. Because we typically control land early and build projects over time, we are often able to continue creating value through leasing, rate growth, expansions, and ancillary income even when the broader market is quiet.
We also believe slower markets tend to reward discipline. When capital is easy to find, it is possible for almost any project to look good on paper. When financing becomes more selective and buyers are more cautious, location, basis, and operating performance start to matter much more. Projects that were underwritten conservatively tend to hold up better, while more aggressive deals often become harder to refinance or sell.
Another benefit of a slower environment is that competition for new opportunities often decreases. Over the past year, we have seen fewer groups pursuing ground-up development, particularly on smaller projects that require more hands-on work. While this can make the near-term environment feel quiet, it often sets the stage for stronger performance later as new supply becomes more limited.
From our perspective, the current market is less about reacting quickly and more about staying patient. In some cases, that means holding assets longer than originally planned. In others, it means taking extra time to stabilize a project before considering a sale. It can also mean being selective about new developments until costs, financing, and rents line up in a way that makes sense.
We have worked through several cycles over the years, and one consistent lesson has been that periods like this rarely last forever. Markets eventually adjust, capital returns, and well-located assets tend to benefit when activity picks up again.
Our focus during slower periods remains the same as always — operate carefully, protect the balance sheet, continue improving the properties we own, and be ready to move when the next set of opportunities appears.
