In the midst of the COVID-19 outbreak, it’s important to view commercial real estate with the eye of a racer…
The concept of target fixation is well known in racing circles.
It’s based on the fact that we go where our eyes take us. Car and motorcycle racers are trained to use this instinctive phenomenon to their advantage. They are always looking up the track or through a turn rather than right over the hood or the windscreen.
This is what allows them to go so much faster than the rest of us ever could. It’s also why us non-racers see debris in our lane and then inexplicably run right over it instead of going around it as we would if we focused on the area to either side of it.
Harnessing target fixation is one of the first skills taught at any two-wheeled or four-wheeled driving school. Without it, students would be driving in a stop-and-go, point-to-point fashion, which makes them reset their target at every entry, apex and exit point. A tracing of their laps looks like one of those connect-the-dots pictures we drew as kids waiting at the dentist’s office. A good racer is looking at the apex of the turn before he reaches the entry point and then picks up the exit before he hits the apex. This reduces steering inputs to one and allows the driver to move through the turn faster.
So what, you ask? Well, we think the concept of target fixation carries over into business decision making, as well, and the current virus scare is one heck of a target to fixate on. It is debris that, for the moment, lies across our path of travel and most of us have applied the brakes to avoid the unknown danger it presents.
That reaction has sent the world’s economy into a tizzy and shifted the psychology of decision making into a defensive posture.
Understandable? Of course. It is an exogenous shock that no one anticipated and it has become the road hazard we just can’t take our eyes off.
That said, when it comes to commercial real estate, it’s probably better to have a racer’s eye for the track. Real estate is a long term investment whether you buy it or lease it. If it represents the whole track, whereas market conditions at any instant in time represent a specific point on the track. In this case the corner workers are waving yellow flags, so it only makes sense to roll off the gas to survey the danger. However, stopping on the track puts you and the guy behind you in danger of a collision. Better to slow down, but keep moving.
As you evaluate the implications of this unexpected road hazard, we encourage you to heed the yellow flags, but to keep moving forward. In all likelihood, the virus will run its course and the medical community will develop protection from future outbreaks. Could that mean we run a couple of laps under the yellow caution flag? Yes, but eventually, the track will go green and you don’t want to park it in pit lane while the track is getting cleared.
We realize that many of you, depending on your industry, will be impacted more than others, but it still makes sense to stay on track in anticipation of a return to full race pace on the next lap. Chances are that if you were looking to buy, sell or lease real estate before this latest market anomaly, the reasons for that decision will come back around soon. In the meantime, respect the yellow flag and hope you see the green one soon.
If you have any questions on how real estate market conditions could be affected, just give us a call. We are here to help.