Log of Lessons Learned - Part 2 Deals

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  • Just because rents have gone up 5% per year for the last 5 years doesn’t mean they can’t go down 25% in one year.

  • Lease first, then build.

  • Control your inventory.

  • The easiest sale is to another salesman.

  • Have an ongoing asset disposition program in good markets. Sell something…. Not every asset or building can be a core holding.

  • Sell when the market is good because when the market is bad, there are NO buyers… at any price.

  • Holding off on selling based on last year’s prices or what your pro-forma said is stupid.

  • Do not follow the market down…. Lead the market. Make cuts quickly.

  • Work renewals hard and early.

  • Beware of tenants with good stories…. Be skeptical.

  • Don’t let what your competition is doing influence your decisions.

  • Do what you think is right based on the facts. You can’t erect a fence to keep the competition out.

  • It’s better to start a building two months late and miss a deal than to start it two months early and face a shrinking market.

  • Secondary locations can sit empty no matter how low rates go.

  • No credit, no deal.

  • New projects must be based on current rooftops and existing infrastructure, not future population growth.

  • Do not inventory land at retail prices for future projects. A 20% increase in land price is only a 2-3% increase in total project cost.

  • Do fewer deals and do them better. You can be more profitable by having more time to focus on the few and you get the added benefit of keeping overhead low.

  • Too many deals dilute time and attention away from the good ones.

  • It takes 5 good deals to make up for one bad deal.

  • When a bad deal surfaces, 90% of management’s time is siphoned off from the rest of the business to deal with the problems of the bad deal. The result: The bad one is still bad and the good ones are now mediocre or troubled as a result of a lack of attention. 90% of management’s time should be spent on nurturing the good ones. Easy to say, hard to do.

  • The first markdown in price is the smallest. The mistake is to hold off on selling at today’s prices in the belief the market will come back.