Insights for the Commercial Real Estate Industry: Understanding the Big and Small Stories of Corporate Strategy

“Strategy” is among the most thrown around words in contemporary corporate America. It is an easy tool to elevate the conversation above the “day-to-day” or the important tactics of executing commercial real estate investment. But, the term’s ubiquity can also undermine its usefulness, and strategy across the commercial real estate (CRE) industry today takes on a myriad of shapes and sizes.

At RCLCO, the core of our business is helping our clients improve their real estate decision-making, and most of the questions we address involve some element of establishing a strategic direction. Inherent in that process is:

• Assuming a broad scope,
• Embracing a long range perspective, and
• Leaning into our accumulated experience of advising innovative real estate companies.

Beyond those strengths, though, our strategy advisory work is deeply informed by what we like to call the “big stories” and the “small stories.” Big stories and small stories are helpful in isolation, but real value is unlocked in a strategy planning process that intersects both.

Big Stories in Strategy

Big stories are the macro-currents that are shaping the evolution of the commercial real estate industry, finance, and the built environment. The big stories most often have a point—a direction, or winners and losers—and they tend to be forceful evolutions that describe a future context for commercial real estate actors. 

Understanding the extent and implications of the primary big stories is a starting point for every strategy planning process, and within RCLCO we spend a great deal of time investigating what these big stories are.

Take for instance, the integration of technology in the built environment. For the past twenty years, real estate companies have grown to appreciate the competitive advantages technology can create. The big story of technology’s importance is bigger than any single owner, but building a strategy that sits comfortably within the context of this big story is critical for every owner.

Technology is one of a handful of big stories that come up in nearly every strategy conversation we have. These macro-currents, like America’s demographic shifts or the increasing institutionalization of real estate’s capital markets, are defining the competitive landscape for commercial real estate companies today, but their strategic implications differ for every company.

Big Story Case Study: Social Impact Investing

RCLCO helped one company integrate this big picture trend into their investment strategy.
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Small Stories in Strategy

Indeed, strategy does not stop with the big stories. Strategies need to match the companies that are making them, and this requires an understanding of the small details that make different companies unique and define individual competitive advantage. These are the small stories. They can describe the ethos of an early-stage startup or the skillset of an experienced capital raising team. Regardless, they are an essential and complementary starting point for thinking about strategy.

Returning to the example of technology, earlier this year Colony Capital announced its rebranding as DigitalBridge to reflect its new strategic focus on digital infrastructure. Without a doubt, the move (as with so many thematic investors) reflected the realities of the big stories, but it also resonated with the company’s small stories: Colony’s experience building new platforms, established capital market relationships, and impressive scale in operations.

In our own work, we have worked closely with many companies seeking to take advantage of demographic tailwinds like an aging population or the shift towards the Sun Belt. The strategy to do so, though, is intertwined with the small stories of each company. For one multifamily developer, we helped them understand what a single family rental strategy could offer and develop a supporting platform. This approach complemented their national footprint and intimate understanding of their extensive customer base of renters.

For a development firm with deep roots in the Midwest, though, intersecting the macro demographic trends with their organization meant pivoting towards high-barrier, sought after submarkets in the same cities they had invested in for several decades.

Successful strategies like these require the thoughtful integration of big and small stories. All too often we find firms that prioritize one over the other: companies chasing big investment trends without understanding the competitive advantages their platform provides or groups that are tethered to a limiting focus on “what we’ve done before.”

Small Story Case Study: Performance Audit & Real Estate Management Assessment

We helped a large family office identify core competencies and performance gaps for their real estate business.
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Through a strategy planning process for real estate corporations, we work with our partners to find the “aha!” moment in between the big and small stories. Whether it’s helping an apartment owner develop product that targets an aging population or a mom and pop developer benefit from the institutionalization of real estate capital providers, we have found that resolving the tensions between big and small stories is critical to building a durable and successful commercial real estate strategy.

For management consulting services or more information about our strategic planning group contact Joshua A. Boren or Eric Willett.

Article and research prepared by Eric Willett.

Disclaimer: Reasonable efforts have been made to ensure that the data contained in this Advisory reflect accurate and timely information, and the data is believed to be reliable and comprehensive. The Advisory is based on estimates, assumptions, and other information developed by RCLCO from its independent research effort and general knowledge of the industry. This Advisory contains opinions that represent our view of reasonable expectations at this particular time, but our opinions are not offered as predictions or assurances that particular events will occur.