I attended an event on Tuesday hosted by the Bank of Utah. Gus Whalen of Featherbone Communiversity was invited to speak, and he shared some insights into his family business that I think are very applicable to many of us in the commercial real estate investment industry.
Gus is the Chairman of The Warren Featherbone Company of Gainesville, Georgia and directs the efforts of the Warren Featherbone Foundation. The 130-year history of his family business has been quite remarkable, being in such diverse businesses as manufacturing, banking, agriculture, publishing and philanthropy. Gus has recently written a new book titled Hooked at the Roots.
The basis for many of his philosophies is that we are a very interdependent people – meaning that we need each other and need to work together to succeed. We cannot succeed individually as greatly as we can with others. Gus demonstrated this through the study of the mighty sequoia trees, which grow as tall as 310 feet but have roots systems that are less than 3 feet deep. How do they thrive? They grow near other sequoia trees and their root systems are interdependent upon each other.
I think that the most interesting quote to me was “if the horse is dead, then dismount.” Their family business went through several major changes in their industry. For example they were initially in the featherbone business, primarily building the structure for women’s corsets, with the dominant market share in this business. When plastic was introduced as an alternative, The Warren Featherbone Company had a great market share of a market that no longer existed. They then moved into making plastic covers for diapers (replacing the rubber ones of that day), which was great until disposables came along. They then moved into making baby clothing – and the story continues to go on as they adapted time and again in the face of market changes and crises.
I think that we face these same challenges in our commercial real estate investments. There are times when a once great location becomes obsolete due to changing demographics and population growth, or the ceiling heights in our older distribution facilities no longer meet current distribution requirements. There are dozens of examples of this in the commercial real estate industry where history says to stay the course but it may be that there is not a market for what we have. We may need to “dismount” and look for alternative uses for those properties. These are often painful experiences, but rarely as painful as continuing down a dead end path.
Sometimes change comes not in the property but in how that property fits into our portfolio. As our needs and circumstances change with age and other life events, our risk tolerance and income needs change. Maybe we’re moving from value-add to cash flow or from more intensive management to single-tenant NNN properties. In the commercial real estate investment business, we always need to consider how the portfolio is serving our needs now as well as whether or not it will serve our needs two or three years down the road.
It often takes us a little longer to “dismount” in the commercial real estate investment industry, so we have to allow time to go through the process on our own terms. We always need to be asking ourselves the question, “What’s next?”
A few of the other thoughts Gus shared that I thought were interesting:
I appreciate the opportunity to share these thoughts, and how they relate to commercial real estate property investments. Thank you to the Bank of Utah and Roger Shumway, Sr. for the invitation to the event.