Another week has come to a close, with the "new normal" experiences of regular team conference calls, video conferences and everyone I know working from home. In the space of a few weeks, we have all shifted to a remote working existence, with water cooler moments being swapped for Thursday night video pub quizzes - and still deals are being done! In a funny way, people are probably talking more, and more often, because we have swapped a quick chat at the copier for longer video conference calls throughout the week, as well as more structured social media and webinar interactions, such as my planning team's podcasts, and our "Shared and Halved" series (which has covered housebuilders, developers and investors, for example - following the theme that 'a problem shared is a problem halved'.) These have been interesting and informative, and I'd recommend catching up on them if you can.
What this has shown is that communication is key, for colleagues, counter-parties and corporates. The "new normal", which is still evolving, almost certainly won't look like the old ways of working (which, let's not forget, were fine up until a few weeks ago). Now we're seeing a genuine, and profound, shift towards people working together to structure, document and complete deals, and to carry on business for mutual benefit. Returns on capital still matter, and competitive advantage hasn't been thrown out of the window, but we are seeing an appreciation that short-term returns may need to be parked for a longer-term benefit at the moment. Businesses are trying to work out how to come out of lockdown in a safe and sustainable manner, and we are seeing a shift to what I'm calling "businesses as unusual" - it won't be like this forever, but it's clearly not what it was, and I doubt that it will ever look like it used to again.
So, what does this mean in the Living Sector? I'm with the quote above from Admiral William McRaven, given to a University of Texas graduate class of 2014. We are seeing a long-term shift in the sector, and the shrewd operators will already have seen that change is needed and be reacting to that. There are clear signs of resurgence, and a resurgence that needs to be shaped to reflect new demographics and a new sector dynamic.
What's needed will be very different depending upon your particular sub-sector - traditional residential conveyancing, for example, has been parked for obvious reasons, and may only come back strongly when people can actually move house once more. I have seen this with developer clients, who have new build schemes temporarily stalled because the market is paused - but not for want of buyer appetite, and not for want of accessible liquidity. We have already seen reports that major house builders are taking steps to reopen sites in the coming weeks, allowing for social distancing, to drive market activity. This overlaps with the affordable housing sector, who were some of the earlier market participants to close sites, and are now working with house builders to work out how, and when, affordable plots can be handed over - driving liquidity back into the market. Don't forget also that registered providers still have to service their existing tenant stakeholders as they are accommodation providers as well as developers and investors - that segment of their operations never went away with lockdown, and some of the work that we are involved with for clients involves forward planning for when lockdown eases and services need to be ramped up again. This is a constant piece across any sector segment that involves provision of accommodation services - how to service current needs now, and how to cost-effectively and profitably service resurgent and divergent needs as activity picks up?
By the time we get out of this, the "new normal" won't be either "new" or "normal" by old standards, but will be exciting and different. I'm looking forward to the challenges and opportunities that will bring, and to continuing the dialogue about "business as unusual".
"The secret of change is to focus all of your energy, not on fighting the old, but on building the new." Dan Millman