The rise of the real estate senior adviser

As formidable challenges confront the real estate industry, firms are increasingly recognizing the value of incorporating critical leadership and strategic skills by appointing non-executive directors or senior advisers.

Forward-thinking firms are embracing innovative approaches to the adviser role, understanding that professional achievements alone may not fully capture the valuable insights and contributions that individuals can offer.

For example, Achal Gandhi, global CIO of indirect real estate strategies at CBRE Investment Management, said the department has three non-executive directors, based in London, Amsterdam and New York. These individuals sit on the investment committee and bring a range of real estate expertise and experience in overseeing global real estate investment programs for US and European institutions.

The shaping of the adviser role is influenced by various factors, including the size of the firm, stage of the business life cycle, complexity and ownership structure. The addition of advisers to real estate private equity boards serves the purpose of broadening the network and accessing the skills and connections needed to facilitate the structuring and closing of deals.

As David Matheson, head of real estate Europe at Starwood Capital Group, recently told us, advisers bring an important diversity of thought and experience, providing invaluable insight into trends impacting customers in other industries. These advisers fulfill critical roles by supporting, mentoring and challenging executive teams, enabling them to arrive at better decisions.

During an inflationary environment when staffing is already the biggest cost for an employer, advisers can be a lower-cost way of harnessing diverse perspectives. And, as an independent third-party, these individuals can offer potentially different viewpoints than a full-time employee. Also, many advisers may already be employed full-time elsewhere or have retired from full-time employment.

A steady hand in challenging times

Significantly, advisers play a crucial role as mentors, drawing on their wealth of experience to serve as an ‘éminence grise’ to senior management. As the average age of real estate CEOs continues to decline, many executives lack firsthand experience of leading organizations through downturns.

Advisers’ insights and experience in navigating economic cycles are invaluable in helping organizations futureproof themselves – particularly given the multifarious challenges we are facing. From increasing interest rates, to the war in Ukraine, energy price shocks, monetary tightening, peaking debt-to-GDP ratios, low unemployment and rising wages, CEOs and senior leadership can strongly benefit from advisers who have weathered previous cycles and are able to guide decision-making.

According to BoardEx, there have been 61 real estate non-executive or advisory appointments across FTSE 250, 100, Small Cap, Fledging and AIM companies since January 2022, versus 45 in 2021. In the current landscape, with challenges such as economic volatility, regulatory changes and environmental concerns, advisers play a crucial role in overseeing risk management and compliance efforts. Their independent advice enables them to identify potential risks and ensure that appropriate mitigation measures are in place. Furthermore, they contribute to establishing and monitoring robust corporate governance practices, which are vital for maintaining ethical standards and regulatory compliance.

Embracing flexibility

There is no rigid format for the role requirements of an adviser, which allows firms the freedom to tailor the position to their specific priorities. This adaptability empowers organizations to recruit advisers capable of addressing the challenges at hand. Embracing such flexibility becomes paramount for future success, particularly given the rapid and transformative changes unfolding in our industry. Businesses must remain agile and embrace forward-thinking strategies to stay ahead.

Research and real-life case studies prove the valuable contributions made by real estate advisers to the success of companies operating in this dynamic industry. As the real estate landscape continues its evolution, highly qualified advisers will be vital to driving the growth and prosperity of these firms, assisting in navigating the complex sector challenges and seizing opportunities.

Regardless of the approach taken by organizations to identify and structure the adviser role, it is paramount that the ultimate choice is made with careful consideration of board chemistry. By doing so, companies can harness the full potential of their advisers, leading to enhanced collaboration, cohesive leadership and optimal results. When advisers mesh well with the executive team, the outcomes can be transformative.