Perhaps Heraclitus, an ancient Greek philosopher said it best.  “There is nothing permanent except CHANGE.” For years, this quote has hung on the wall of my office behind my desk, but it wasn’t until this year that anyone seemed to notice or comment on it. Perhaps, it is just a sign of the times.

It’s so easy to be distracted by the noise of the 24/7 news cycles, be confused by the contradictory messages of experts on almost any topic, be distraught by polarizing messaging of political figures – and then there is the economy. It seems 2023 is filled with some clouds of uncertainty hanging over us – inflation, high-interest rates, concerns about a pending recession or hopefully a soft landing. Headlines about layoffs in the tech sector create anxiety despite record-low unemployment after years of growth. It’s hard to tell the news from the noise. Fortunately, the real estate industry has not overbuilt this cycle and the fundamentals remain strong for most property types.  Likely the next year or two will have its challenges, yet if you step back, there’s so much to be grateful for.

There is nothing permanent except changeAfter a decade-plus runway of growth, so many young professionals in our industry today have not had the opportunity to experience a downturn other than during Covid.  I remember my first recession as an adult in the late 1980s – a very turbulent time in the real estate market after the overbuilding of the 1980s and the tax reform of 1986. At that moment, it seemed like a horrible time to be starting a career in commercial real estate, but lots of change followed and so did opportunity. And of course, there have been many cycles since.  Each time, new opportunities emerge.  So much to be grateful for.

Math doesn’t lie, but sometimes the assumptions do. It’s likely going to be harder to make deals work. Cheap and abundant debt may have disappeared, but life goes on. Quoting Warren Buffett, “In the business world, the rearview mirror is always clearer than the windshield.”

Almost 30 years ago, I moved down to the sunbelt and haven’t looked back. Many changes have occurred since then. The Atlanta area has been welcoming newcomers from everywhere and continues to have robust population and job growth.  During the past decade from 2010-20, the metro Atlanta population grew at the third highest rate of any major metro area in the country. Last year, metro Atlanta added 126,000 jobs and Georgia added 200,000 net jobs – record bests since I relocated here.  Like anywhere else, there is no shortage of problems, but the opportunities have been abundant and for that, too, I am grateful.

So what opportunities are ahead? Looking at the greater real estate market, there is still a national shortage of housing which will likely be a driver of opportunity once financing markets re-stabilize. Despite the headline news that national population growth has been slowing to a new 100-year low per Census Bureau, like everything else, there are plenty of nuances that often get overlooked.

According to a recent report by Harvard Joint Center for Housing Studies, despite slow growth in overall population, there has been a surge in household growth. How’s that possible? Millennials are now forming households that were delayed earlier in the decade. The share of population heading an independent household has grown, especially in the 25-44 age range. In the older population, people are living independently longer. If the rate of households is growing faster than population growth, simple algebra would tell us that household sizes are still getting smaller too. Another potential opportunity among the challenges.

The private sector alone can’t solve the housing shortage and affordability problem. It’s math. Private capital needs to be compensated for risk. We need the public sector to see the private sector as a partner, not as a greedy enemy. Making development more difficult and putting moratoriums is not the answer to addressing the housing problems. Some municipalities and civic leaders understand.  Unfortunately, many zoning codes and regulations have deep roots in restricting housing and making it more exclusive. Isn’t it time to rethink outdated zoning codes which serve as barriers or obstacles in the housing crisis? It’s challenging, but it’s not rocket science or quantum physics. Remember that Albert Einstein once said, “In the middle of difficulty lies opportunity.”

Despite the ongoing uncertainties, I’m grateful for the opportunities and for those who helped pave the way in our communities. In a word Gratitude.

What’s going on in your world? Feel free to reach me at Wishing your 2023 is filled with good health and opportunity!



Craig Kaufman