Crexi Q&A: Andy Studdert on COVID-19 and the Future of CRE

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headshot of Andy Studdert

Andrew (Andy) Studdert is currently an independent corporate director and consultant. Before his current role, Andy served as Chairman, President & CEO at NES Rentals Holdings, Inc., COO & EVP for United Air Lines Corp., CIO for United Air Lines, Inc., and EVP for First Interstate Bancorp (California).

From COO of United Airlines during the 9/11 to his tenure as CEO of NES Rentals, Andy has a proven ability to lead through unpredictable adversity to success. He is deeply experienced in revenue growth, network security, operations, technology, safety, and financial leadership, with a history of successfully establishing strong stakeholder relationships. 

Andy boasts an impressive record of developing and executing strategic business action plans. Andy also operates in a consultative capacity and serves on the boards of The Big Shoulders Fund, Cramo Oyj, Target Hospitality Corp., and Alta Equipment Group, Inc., among others. He also established the Andrew P. Studdert Chair of Business Ethics and Crisis Leadership at Loras College in Iowa. Andy received an undergraduate degree from San Francisco State University.

We spoke with Andy to gain his valuable insights into the state of commercial real estate, the impact of the coronavirus, and what counsel he provides to navigate the unprecedented terrain of CRE in the wake of current COVID-19.

Crexi: What is your overall read on the pulse of commercial real estate today?

AS: Generally speaking, the whole world is currently in crisis mode, and — even after recovery — there will be a six-to-nine month period where people will be more resistant to and fearful of change in any form. As an example, moving to a new location will throw more stress than typical onto an organization or group of people. Truthfully, organizations aren’t much different from human beings in their immediate and consequential response to traumatic change. Those who are confident and agile will be able to adapt quickly and succeed, but organizations will only adjust to the new circumstances as well as their employees do. 

Too, there are opportunities in the upheaval, and you’ll always have people looking for what’s exposed. Warren Buffet said, “You don’t know who’s swimming naked until the tide goes out,” or something along those lines. For those looking, there’s a world of opportunities to jump on in this situation.

Crexi: What are the main issues you see companies and executives focusing on as they manage the impact of COVID-19?

AS: Over the last few months, we’ve gone from a period of denial and disbelief of coronavirus’ magnitude to a phase of acceptance and confusion. My advice has been to stay focused on the answers to be found in your company. 

This means considering and addressing “what can put my company out of business?” If it’s missing debt payment on your loan or some other financial covenant, stay laser-focused on making sure that doesn’t happen. Separate your mind into protecting the viability of the organization and maintaining the core function of the business. Sometimes people get so focused on a crisis they forget to stay focused on their actual company.

At United Airlines, one of the first things they teach a pilot — and regularly remind them — is that when in an airplane crisis, first and foremost fly the airplane. Stay focused on your core role, and don’t let all this bouncing around you distract you from where you make a mistake.

Crexi: What are some things you learned in managing 9/11 and the ’08-’09 Recession that are applicable today?

AS: Leaders are humans, which means they can be distracted. I would encourage everyone in leadership roles to remember that the people they work with are suffering a significant amount of stress and anxiety, greater than they’re letting on. People are great at wearing masks and acting — it’s your job as a leader to understand the high amount of stress in the boss-employee relationship and your responsibility to vent that pressure. 

You do this by consistently making it your priority to take care of your team. This looks like two things. First, if you have to reduce the size of your organization, make it clear that your organization’s reduction is very painful by heaping benefits on those you’ve released. If you owe them one week, give them ten days. If you owe them one month of benefits, give them two. 

Overcompensate those you have to let go a) because its the right thing to do, and b) it helps people handle the immense change you’ve thrown at them. Too, your actions reflect in the eyes of the people they left behind. They’ll think, “If it happens to me, I’ll be okay, because my company takes care of people.” These acts will reach the ears of your customers, too. Your furloughs are being cared for, your employees feel less anxious, and your customers will respect you and want to do business with you. If you take care of your people in whatever difficult action you take to survive, it’s better for everyone.

Crexi: What should CRE industry leaders keep in mind as they assess changing market conditions?

AS: CRE professionals should evaluate tactical and structural changes in how we work, eat, and entertain. I think the natural barriers to remote working and remote eating (eating at home) were destroyed within a week during the coronavirus. 

As an example, in 2009, my company had a massive reduction in revenue. We reduced our staff and also our corporate footprint in moving to a new office. We switched work hours to working remotely twice a week for 10 hours and in-office twice a week for 10 hours. Productivity went up 25%, and our footprint dropped by 60%. We did this 11 years ago during the Recession, and our turnover decreased to zero. 

Why? For example, if you’re a single parent and all of a sudden you only have to use daycare two days a week, you can plan for your doctor’s appt, your living costs reduce significantly, and people like it. With coronavirus, workplace adjustment has been forced upon our society, and some percentage of workers will demand the same flexibility going forward. 

I think we’ll get a readout on how we’ve reduced our carbon footprint during this downtime. The reduction in overall emissions (less driving and flying) will further support working from home and the environmental benefits of doing so. Even if it’s a 20% shift from offices, more workers will demand a mixed working environment that’s closer to home. 

Altogether, there will be rethinking of CRE and repurposing of existing spaces. Those who can think out a year ahead are going to win. Those that are focused only on tomorrow are going to lose.

Crexi: How do you view technology’s role in the future of commercial real estate, considering the impact of COVID-19?

AS: My wife has a 92-year-old aunt, whom she called recently to wish her a happy birthday. Her aunt responded, “I can only talk for a couple of minutes; I have two zoom calls with my grandchildren.” 

I think resistance to adoption will fall away really fast. Generations will adopt remote communications more aggressively than a couple of months ago, easily. Interestingly, Zoom and the like will force younger generations to learn face-to-face conversation. In comparison, older generations will need to learn to manage people differently – an employee can’t just come to sit in their office, for example. Communication will happen differently, and management and leadership styles will adapt. Old tools won’t work in new environments.

I always think of commercial real estate as belly-to-belly marketing. Brokers get close with a potential client at dinner or a game or party. We won’t have restaurants or sports another six months to a year, so you have to replace that with something else. I’m not sure what the answer is, but people compelled to get creative (i.e., commission-based salespeople) will figure out a way to get the job done. Success will require creativity because survival depends on it – they’ll figure out how to replace the face-to-face interaction with another kind.

Crexi: What advice would you give your clients during this time? What advice would you give your colleagues?

AS: I’ll share the most straightforward answer that helped me during both 9/11 and the Recession. Over-communicate to the point that you think you’re irritating people, because you’re not. It doesn’t have to be purpose-driven, but it needs to be sincere. If this means you should simply call up one of your employees to talk about the Cubs game because you were thinking about them, your intent is sincere. 

A simple gesture can break someone’s funk during a day. Someone called and cared about them, and it makes you feel good because you’ve helped somebody. Remember, people are going through a lot of anxiety and pain. Tempers will be short, and things that were little problems two months ago can seem like huge problems today. 

The other key element is to over-respond early! If you think you’ve caught a trend in your business, over-respond early without over-reacting. At United Airlines, when we lost two airplanes, the one that crashed in Pennsylvania was hundreds of miles away from the nearest metro, and we weren’t allowed to fly. Two hours after 9/11 occurred, one of my senior officers happened to be visiting Washington, DC. I had him gather all volunteers he could find from the area, rent 12-person vans, and caravan to the middle of Pennsylvania to set up a crisis response team. It was the only way we could get anyone there. The convoy arrived by the end of the first night and was able to take charge. If UA hadn’t over-responded early, it would’ve taken us days to arrive on the scene. 

Make an operating decision you think is right and modify as you go along. A crisis is like an addiction; you get hooked on it and forget to do the job. Remember to “fly the airplane” — the crisis becomes the elixir and boring stuff is running the company. Don’t forget to run the business.

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Shanti Ryle
Shanti Ryle

Content Marketing Manager

Shanti leads Crexi's content marketing strategies with 7+ years of content development experience, creating everything from blog posts to award-winning podcasts. Previously, she worked on content teams at Snapchat, Weedmaps, and HopSkipDrive as well as developed copy, articles, and media for freelance publications.

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