The Test is Now Upon Us


Ferguson Partners is pleased to share an exclusive excerpt from Chairman and CEO William J. Ferguson’s timely new book, The Test is Now Upon Us, on the defining qualities of leadership through crisis, in the real estate industry and across all other industries.  The excerpt contains the book’s introduction, Leadership Must Prevail, as well as its first chapter, The Secret Sauce for Success.

To access a PDF version of the following introduction and chapter, please click here. The Test is Now Upon Us, in its entirety, is currently available for purchase at Amazon.

The Test is Now Upon Us 

By William J. Ferguson

Introduction: Leadership Must Prevail

Through this COVID-19 era, investors of all stripes have gone from gauging whether an epidemic in China could spread much farther to believing it will destabilize the global financial system. A historically deep recession is now inevitably descending upon us. Even if it is short, it is likely to be painful, and risks have grown that it could create a financial crisis. Government debt has hit historically low yields while major equity indices in the United States and Europe have fluctuated irrationally.

The COVID-19 pandemic has turned much of the world, including the real estate sector, upside down. While there is no playbook for reces­sions induced by a global pandemic, investors can outperform during economic downturns by understanding individual sector and balance sheet risks and the interplay between private and public markets.

Managing through crisis tests every leadership team. And while this COVID-19 pandemic is unique, the real estate industry has prevailed through multiple economic cycles. Like the earlier downturns, lead­ership principles will prevail. When I started in this business in 1981, working closely with real estate leaders to address their talent and organizational needs, the industry was going through a major metamorphosis. Global capital sources were entering real estate. Firms that had been private were going public. The first REITs were being traded, allowing real estate firms to aggregate assets and recapitalize them through the capital markets. These instruments met eager demand from pension funds, endowments, and other institutional investors looking to commit a portion (ultimately, about 10 percent) of their holdings to real estate.

This was all part of the process of “institutionalizing entrepreneurship” in real estate, as I described in my first book, Keepers of the Castle. Today, almost 30 years later, there are some 200 REITs being traded. Institutional dollars invested in real estate around the world amount to $500 billion-plus. Real estate has even become its own investment class, having been spun out of the broader alternatives sector.

As I’ve been privileged to witness over the past few decades, the shift from entrepreneurial to institutional has been the perfect incubator for leadership, especially given the unparalleled growth of the real estate industry. Combining commercial and residential real estate (home-building and residential mortgage lending), this is undeniably the largest industry in the United States, and arguably in the world. Its impact on the global economy is huge.

I have always been fascinated by what makes leaders and their organizations successful. But real estate, admittedly, has not typically been perceived as being at the forefront of leadership excellence, no doubt due to its traditional transactional orientation. People who grew up in this business have been dealmakers by their nature. They achieved success by their ability to get things done. Their “run through walls” type of personality puts more emphasis on action and far less on EQ. This is an industry steeped in survival of the fittest, a far cry from firms such as Walt Disney or IBM that have taken a more traditional and sophisticated approach to educating and developing leaders.

But real estate has changed, and its leaders have evolved with it, displaying tremendous leadership capabilities that put them in the company of the best in any business. The most successful real estate leaders and organizations are those capable of anticipating change and identifying new growth opportunities. These are the strategic leaders in the industry who have proven their ability to see the trends before they emerge.

The true testing ground was the global financial crisis and the Great Recession of 2008. Real estate leaders who survived displayed an uncanny ability to manage risk and optimize opportunities. After the downturn, which wiped out as much as 75 percent of asset values, those who still had capital were the ones to benefit. Today, the major players in this industry have built very impressive scale and scope.

Identifying and managing risk is key to leadership, but it is not the only component. Leadership is, at its essence, an appreciation of people

— recruiting, retaining, and developing them. Every well-regarded real estate leader I know is keenly focused on this, particularly to ensure future leaders are in the talent development pipeline. Public and private investors also seem equally concerned about people as assets, which is putting a big push on succession planning at real estate firms.

Great leaders in this business have always appreciated the importance of hiring the best teams and treating people respectfully. For them it is all about the people, before it became fashionable in this industry to say so. One leader who comes to mind is Bill Sanders, founder of LaSalle Partners Ltd. (which is now Jones Lang LaSalle LP), as well as Security Capital Group Inc., which spawned several of the industry’s first REITs. Sanders set about to create a culture in which people saw themselves as playing on the same team. He emulated what he observed in Corporate America and created an organization that was truly unique in real estate at the time.

Another quality that distinguishes great leaders is that they never stop being entrepreneurs, even when they are more institutional in their approach. Innovators such as Sam Zell always seem to be one step ahead of where the industry is going. Great leaders also create followership, as Deb Cafaro has done to turn around Ventas Inc., now a highly successful healthcare REIT, which is part of the S&P 500 Index.

Real estate leaders draw upon their personal values — honesty, integrity, and trust — to inform and guide the culture of their firms. As I observed in my book Market Discipline — The Competitive Advantage, the Canadian real estate industry was not nearly as impacted by the Great Recession in 2008 as the U.S. was, because Canadian leaders in real estate and banking were more conservative. They kept their egos in check and exhibited humility in their business dealings and accomplishments.

Acutely aware of real estate’s cycles, great real estate leaders mind the details and always take the long-term view. Jeremy H.M. Newsum exemplified these values during his leadership at Grosvenor in the U.K., seeing himself as part of a long continuum. Real estate leaders are also realists, facing problems head on instead of putting on blinders. They know all too well the cycles of this industry and the dangers of ignoring them. And they leave a legacy, not only in their work but also in philanthropy, as Sir John Ritblat has done in his funding of the British Library and its collection of rare documents and manuscripts.

Tried and true, these values distinguish great real estate leaders globally. Greatness knows no boundaries or borders, whether in the U.S., Canada, Europe, or Asia. While cultural norms and practices differ from place to place, what it means to be a great leader does not.

But how do real estate leaders stack up outside this sector? How do they compare with the greatest in business, science, the arts, politics, or philanthropy? That has been my goal in this book. By studying archetypes of leadership, foundational traits emerge: the honesty and integrity of Abraham Lincoln and Mahatma Gandhi; the lifelong learning

of Helen Keller; the innovation of Pablo Picasso; the entrepreneurship and vision of Elon Musk, Bill Gates, and Jeff Bezos; the long-term view of astronomer Edwin Hubble; the legacy-building of Andrew Carnegie; and many more. What I found, to no surprise, is that great real estate leaders possess these same traits, becoming archetypes in their own right.

We are at a time of unprecedented change and crisis, and simultaneously of succession in this industry (as is true of all industries), when many of the greats are reaching retirement age. At the same time, a new generation of leaders is rising through the ranks. Those celebrated in this book, and in my previous works, are arguably real estate’s “greatest generation.” Capturing their wisdom and values not only honors what they’ve accomplished, but also sets a standard for the next generation to follow. The current and future industry leaders will survive the COVID- 19 crisis, if they embody the leadership attributes evidenced by the great leaders across all walks of life.

While real estate will continue to evolve and innovation must continue, the industry’s great leaders are stalwarts of integrity and stability. Without them, what they have created and, most important, how they created it, this industry would not be where it is today.

I am grateful to the exemplary leaders profiled in this book and in my previous works:

Keepers of the Castle: Real Estate Executives on Leadership and Management, Urban Land Institute, 2009.

Market Discipline — The Competitive Advantage: Lessons from Canada’s Real Estate Leaders, Real Property Association of Canada (REALPAC), 2012.

The Wisdom of Titans: Secrets of Success from Entrepreneurs Who Rose to the Top, Bibliomotion, 2013.

Leading for the Long Term: European Real Estate Executives on Leadership and Management, Urban Land Institute, 2014.

The stories and quotations from real estate leaders draw from these previous works (as cited).

I also want to acknowledge with gratitude my team at Ferguson Partners, including Kerri Horton, Becky Wensel, Kim Chantelois, Rebecca Susmarski, and Jennifer Lara. And thanks to Patricia Crisafulli, our manuscript consultant, and Pat Commins, who assisted with research.

My hope is that the example of those profiled here will serve as an inspiration for those who follow in the leadership journey.

— William J. Ferguson

Chapter One: The Secret Sauce for Success

In a landscape of towering skyscrapers, multi-billion-dollar developments, and large-scale projects that literally change where and how people live and work, it might be easy to imagine egos getting inflated. For many that is the case. But in studying the icons of leadership, as well as great leaders in real estate and business, it becomes clear that humility is a hallmark of personal excellence. The greater people’s achievements are — the higher they rise in profile, income, and influence — the more they need to be humble. Among those who are admired by others, who have become role models for current and future generations, humility is a distinguishing virtue. Humility enables leaders at the pinnacles of their careers and at the top of their professions or industries to understand the key difference between who they are and what they do.

Humility is also the underpinning for integrity which, arguably, is the most important attribute of a great leader. If there is a “secret sauce” for success, it contains equal parts of these fundamental “ingredients:” humility, to keep everything (and especially past success) in perspective; and integrity, to earn the trust of others through honesty and fair-dealing. Humility and integrity are, in fact, the historical values of the global real estate industry and its most enduring leadership attributes.

A leader who exhibits both humility and integrity inspires trust, confidence, and dedication among employees and partners. Integrity, when combined with vision and passion, is a powerful force that can transform organizations — and even change the world. Integrity affirms one’s dedication to a code of business standards and commitment to ethical principles. The best and most effective leaders embody and articulate these standards and principles. By living them, they serve as examples to others and establish a culture of integrity within their organizations. These are not just platitudes, but necessities. In real estate, after all, deals are still done largely on the track record of trust among those involved.

Far more relationship-driven than motivated solely by transactions, real estate leaders understand that reputation is everything. Across Canada’s tight-knit community, Europe’s country-specific markets, the regional differences of the U.S., and the dynamics and emerging opportunities of Asia, the global real estate industry is founded on integrity. Players come and go, particularly during times of rapid expansion when the lure of a potential “quick profit” attracts those with no history or experience in the industry. When the inevitable, cyclical correction follows, these short-term players are swept out with the tide.

Jeremy H.M. Newsum, former non-executive chairman of Grosvenor Group Limited, described it best: “Keep an eye on those who really know what they are doing, and ignore the short-term, ‘glamour players’ who are trying to make money very fast.”1

After the short-term players are wiped out, the industry’s stalwart leaders remain standing, their reputations and businesses intact. As we saw in the wake of the 2008–2009 global financial crisis, when a downturn becomes more than the typical correction, escalating to crash and crisis, survival is far from guaranteed. Only the most prepared, disciplined, and well-capitalized businesses will sustain themselves through the fall. In these times, humility more than hubris dictates survival.

As we look to the future, the timeless values of humility and integrity will distinguish the best leaders, particularly in global real estate. In order to realize the vision of a transforming landscape while dealing with political uncertainty, substantive capital flows, and economic cyclicality, real estate leaders will need humility to keep themselves grounded and integrity to elevate trust in their companies and the industry.

Icons of Leadership

In this chapter, we will examine two great leaders who exhibited the fundamental traits of humility and integrity, which are prerequisites for achieving and sustaining success. These icons, Abraham Lincoln and Mahatma Gandhi, set lofty examples but their core values of humility and integrity are replicable. Indeed, and as I would argue, these same values and principles are found within the best real estate leaders today. Abraham Lincoln, one of America’s greatest presidents, was also known for great humility, putting him at the top of leadership archetypes. “Young and unknown to many,” Lincoln described himself when he ran his first political campaign — seeking election to the state legislature at the age of 23. As he told voters, “I was born and have ever remained in the most humble walks of life. I have no wealthy or popular relations to recommend me. My case is thrown exclusively upon the independent voters…”2  Lincoln ultimately lost that election; in fact, he went on to lose at least five more elections. Being comfortable with previous losses became part of Lincoln’s disarming humility, which he retained all the way to the White House.

Lincoln entered the presidency at a dire time when the United States was divided. Before the end of his first term in office, nearly half the U.S. states and territories had seceded to the Confederate States of America. Not only were the states divided, but the culture in the country was as well. Lincoln’s one goal was reuniting the country. While he wasn’t a proponent for war, Lincoln didn’t shy away from it, either. From the initial drive to preserve the Union, the Civil War expanded in scope, with abolishment of slavery through Lincoln’s bold Emancipation Proclamation.

The Civil War was America’s most gruesome, lasting over four years and claiming the lives of more than 600,000 people. But Lincoln took a devastated nation and put it on a path of rebuilding. This gargantuan task, though, was clearly beyond the capabilities of any single individual. The greatest testament to Lincoln’s leadership and evidence of his humility is that he sought out and procured the guidance and support of his former rivals.

As historian Doris Kearns Goodwin describes in her Pulitzer Prize-winning Team of Rivals: The Political Genius of Abraham Lincoln, Lincoln famously brought into his Cabinet his former rivals who had not only opposed him, but also despised him personally and politically. Three rivals in particular included William Seward, who became Secretary of State; Edward Bates, named Attorney General; and Salmon Chase, Secretary of the Treasury. When Joseph Medill of the Chicago Tribune asked Lincoln why he had named enemies and opponents to his cabinet, Lincoln’s answer was not only politically astute but, to my mind, evidence of great humility: “We needed the strongest men of the party in the Cabinet. We needed to hold our own people together. I had looked the party over and concluded that these were the very strongest men. Then I had no right to deprive the country of their services.”3

How many leaders can honestly say they would have the same courage, not only to surround themselves with people who entertain different thoughts and perspectives, but who also oppose them? It takes an extraordinarily strong character, in terms of selflessness and humility, to take on a “team of rivals” for the common good.

In the same vein, respected real estate industry leaders deeply value teamwork. The best surround themselves with people who have extraordinary potential and who are not afraid to question the status quo. A visionary leader will have a staff with impressive credentials and engage them, allowing them to grow.

Gandhi’s Strength in Humility

Among the world’s most iconic leaders, one name has become synonymous with the strength that comes from humility: Mahatma Gandhi. Gandhi not only changed the course of his country’s history, as he campaigned tirelessly for India’s independence from the British Empire, but also inspired many great leaders who followed his example of nonviolence, most notably Dr. Martin Luther King, Jr.

Gandhi had been deeply affected by racism as a young man, such as during his time as a lawyer in South Africa when he was forced to remove his turban in the courtroom. Several days later, he was ejected from a train for refusing to move to the back of the railcar. After such experiences, Gandhi vowed to fight “the deep disease of color prejudice;” when he returned to India, he began his campaign to fight discrimination through non-violent means.

Years earlier, while studying abroad in England, he had been deeply affected by Christian teachings on humility and forgiveness. He took those teachings to heart in the struggle against British rule. Instead of inciting violence and creating turmoil for the purposes of revolution, Gandhi insisted on using civil disobedience and non-cooperation as a means of resistance. He kept his resolve even when such resistance was met with violence.

After the end of World War II, negotiations for Indian independence began, led by the British Labour Party, the Indian National Congress, and the Muslim League. While Gandhi advocated for a unified India, the final plan created dividing lines in the country based on religion. Even after India gained its independence, the nation still struggled with violence between the Hindus and the Muslims. Gandhi tried to create peace between both sides, but was assassinated on January 30, 1948. The world lost a leader defined by humility and selflessness. But Gandhi’s shining example of humility and principled leadership has never dimmed.

Iconic leaders such as Lincoln and Gandhi set a high standard. Their efforts to unify nations, establish independence, and campaign for the rights for others are so lofty, though, they may not seem immediately applicable to the world of business. But as archetypes and role models, they remind us of the importance of integrity and humility, which are essential to every leader.

Yet there are numerous parallels when examining the best in leader- ship. Within real estate today there are many humble leaders with high integrity who will help build the future of this industry on a foundation of the right motivations. These principles are all the more important with the real estate industry at the epicenter of global change. As a recent PwC report observed: “Looking forward to 2020 and beyond, the real estate investment industry will find itself at the centre of rapid economic and social change, which is transforming the built environment. While most of these trends are already evident, there’s a natural tendency to underestimate their implications over the next six years and beyond. By 2020, real estate managers will have a broader range of opportunities, with greater risks and new value drivers. As real estate is a business with long development cycles — from planning to construction takes several years — now is the time to plan for these changes.”4

Real estate leaders must aspire to these same timeless standards of humility and integrity in order to build upon the industry’s strengths and carry it into the future.

Leadership Lesson

Iconic leaders define greatness for all generations. Among them are truly special individuals who epitomize humility and integrity. Likewise, great leaders in real estate display traits that become sources of incredible strength to overcome division and adversity, for a lasting impact.

Facing the Storms with Integrity

Integrity is important in every industry, but particularly so in real estate where deals representing large sums of money were historically done by a handshake (and where that spirit remains). For the best leaders with long and storied careers that have spanned decades, their word is literally their bond. In conversations with real estate leaders, the word integrity is frequently heard. Whether the subject is company culture, hiring criteria, or treatment of lenders, investors, and partners, integrity is a core value that leaders view as critical to both organizational and individual success.

As Ed Sonshine, CEO of RioCan, the largest retail REIT in Canada, observed: “You build a company by being straightforward with people … It’s called integrity. You have to have it.”5

The value of integrity is never clearer than when there is a crisis. The greatest crisis the real estate industry faced in recent years was the 2008–2009 financial crisis. A surge in non-performing loans — initially in the residential sector and shortly thereafter in the commercial real estate space — caused a crash in the marketplace. Housing prices plum- meted, banks stopped lending, new home construction ceased, and financially strapped homeowners struggled to stay afloat. Many simply walked away from their homes and financial commitments.

Values in the commercial real estate market dropped around 40 percent during this period, although the scale of foreclosures and defaults was not as large as in the residential market. Nonetheless, risky commercial real estate loans with modest equity and too much leverage were syndicated in the CMBS markets, and values were not underwritten properly by investors in CMBS loans. Loan defaults and falling property values cascaded through the rest of the economy. The secondary market in securitized real estate loans crashed, causing huge problems for investors, owners, and lenders.

Integrity in real estate means not turning a blind eye to problems and crises. The long-term players manage their risks appropriately. And when the industry as a whole reexamined its principles and practices (as in the case of mortgage lending, post-financial crisis), the most notable leaders were the ones leading the charge for reflection and, when necessary, for change.

Where humility and integrity reside, trust can be found. The real estate industry could not exist without it; trust is an underpinning of transactions and the foundation of developments that take years. With the business world experiencing a trust crisis, leaders in the real estate industry needed to step forward as positive examples and run their businesses more conservatively.

Trust is a Scarce Commodity

In the business world today, trust is a scarce commodity. Trust is not doled out lightly; more than ever, business partners and customers demand that it be earned. A recent Gallup poll on trust in various professions made a shocking revelation: business leaders ranked near the bottom, with a 32 percent “low trust” rating. These trends are strongly felt in the younger demographic. A recent Harvard study showed that trust levels in American institutions among 18- to 29-year-olds has fallen to a record low.

This trust gap is not something business leaders can take lightly. Here, the real estate industry has an opportunity to shine the light for the broader business community: one of the key factors that influences trust is sustainability. Recent movements in real estate have focused more on sustainability and the future needs of society, including using eco-friendly building processes and materials, as well as affordable and practical housing.

Taking on these challenges requires leadership imperatives across the global real estate industry. As I wrote in Keepers of the Castle, “Future leaders must be able to do more than staff executive teams and manage increasingly complex organizations with financial acumen and interpersonal savvy. They must also understand local markets and bricks-and-mortar principles, while having a firm grasp of national and global economic trends. Leadership matters more than ever in a rapidly evolving business landscape.”6

As we consider what it will take to build the future, leaders must exhibit the best of leadership traits, the paramount being humility and integrity. As Mark Hoplamazian, President and Chief Executive Officer of Hyatt Hotels Corporation, noted: “Integrity is simply the price of entry.”7

Exhibiting the best in leadership for current and future generations is a tall order. But it is one that the best in the real estate industry have proven they can fulfill.

Humility – Who You Are, Not What You Do

In all my years of working closely with global leaders, particularly those in real estate, I have been struck repeatedly by the humility of those who have achieved the most. As one leader told me a few years ago, “I really don’t like talking about myself.” No matter that this leader was widely regarded by others to be a statesman in his industry, and he oversaw a global business empire. Humility kept him from getting wrapped up in it. When this leader was finally persuaded, as part of research I was conducting at the time, to discuss “lessons learned” over a long career, he readily gave full credit to former bosses and mentors for positioning him for success, and put the spotlight on his team for current accomplishments. Quick to acknowledge mistakes, he never made one smug or self-satisfied remark. In his own eyes, he was merely a person doing the best he could, seeking out opportunities and continuously managing risks. He was humility in action.

Make no mistake, though: those in leadership, whether in politics or business, must have a great deal of confidence in their own ability. In real estate, the risks involved in multi-year development and managing projects through the inevitable cycles will overwhelm those who are unsure of their own capabilities as leaders. But they keep their egos out of it. They know ego is the equivalent of putting on blinders, of believing your own “press” — of thinking that past achievements automatically translate into future success. Believing that they are indomitable, even immortal!

Among some of the most notable leaders in history, humility distinguished them to achieve more than their egos alone would have allowed. It is counterintuitive, but critical for pursuing the kind of long-term success that comes from stewardship of resources and executing a strategy that is best for all involved.

Jon Gray at Blackstone personifies humility. He started as an asset manager at The Blackstone Group fresh out of college in 1992 and later rose to head the firm’s vaunted real estate group. Under Gray, Blackstone’s real estate investments became one of its most valuable portfolios, with $140 billion in assets. He orchestrated the $26 billion buyout of Hilton Hotels in 2007 and then took it public again in 2013; the IPO was then the biggest ever for a hotel firm. In February 2018, Gray was named the firm’s COO and President; he’s considered the leading potential successor to co-founder and CEO, Stephen Schwarzman. Furthermore, Gray, whose sister-in-law died of ovarian cancer at age 44, has given over $100 million to BRCA related cancer research. He got his start working as a busboy at his mother’s catering company at age 14.

For perspective, Blackstone turned to John Schreiber, a fellow Chicagoan who had just retired from JMB Realty, to launch its real estate business. As the fund was taking shape, some of the firm’s senior managers suggested Jon consider joining it, as something new and exciting but altogether incidental. He became the first, and for a time only, junior-level employee. Combining his skills with numbers and analysis with his experience in M&A and the free rein offered by the new position, Jon began to cultivate his understanding of real estate. Yet it was under the tutelage of the equally low-profile Mr. Schreiber — Pete Peterson of Blackstone described Schreiber as a godfather, Roy March at Eastdil as Obi Wan Kenobi — Jon soon became a force to be reckoned with. “Jon Gray is maybe the best and brightest in his generation, maybe ever,” said Mr. March. “But he also had the benefit of this sage sensei in John Schreiber, which just makes him even better.”8

In Jon, Pete Peterson and fellow Blackstone founder Stephen Schwarzman saw a smart, independent kid who could grow under their tutelage. “I’ve been around Wall Street now, it’s hard to believe, since 1973, and I don’t think I have ever seen this particular combination of attributes,” Mr. Peterson said. “I don’t know if you believe in compound probabilities, but when you have three critical qualities, like his talent, and like his team-building, management ability and then his human qualities, and they’re all at the very, very top rank, and they’re all in the same person, you tell me what the probability is of finding someone like that.”9

“People trust Jon, so they open up more,” said Tony James, Blackstone’s Executive Vice Chairman. “In making deals, the more insight you have, the more you can influence the process, the better positioned you are to make a deal.”10

It is the Midwestern version of keeping your friends close but your enemies closer — insofar as Jon has no enemies.

“He’s a closer,” said Steve Roth, Chairman of the Board and Chief Executive Officer at Vornado Realty Trust. “His objective is not to get into a big drama. His objective is to make a big deal and move on.”11

Somehow, mostly by choice and his own careful actions, Jon has managed to remain an anonymous anomaly in two of the most ego-driven industries in New York: real estate and finance. It may very well be the secret to his almost unparalleled success. Modest or manic, Jon is said to keep a low profile because he does not see the benefit of raising his, and would simply prefer to be another cog in the Peterson- Schwarzman machine. Which is not to say he is a hermit — friends describe him as animated and gregarious, but above all else, humble — he simply likes to keep things to himself.

Leadership Lesson

Real estate industry leaders must ensure that diversity becomes a defining value. For the industry to be known for its high integrity, and for its leaders to be recognized for their humility and willingness to change, diversity must become a greater priority.

The Power and Potential of Diversity

As we examine the best of real estate leadership, we also need to acknowledge the one persistent gap: a lack of diversity. For me and our firm, encouraging diversity — gender, race, ethnicity, and sexual orientation — has been a priority. In this discussion of foundational values, we would be amiss if we did not also address the need in the real estate industry.

Despite a strong business case for diversity, women continue to meet significant challenges in making greater inroads into senior leadership. In S&P 500 companies women account for roughly half of the workforce, but only 6 percent of CEO positions (although this is an improvement from years past when the figure was around 4 percent).12

The problem is even more pronounced in what have traditionally been male-dominated industries. For example, real estate investment management has been so male-centric, there are comparatively few women in the ranks to rise to senior leadership. A 2014 study by Ferguson Partners Ltd. found that only about 5 percent of the large firms had meaningful representation by women in their real estate investment management leadership, and in many smaller firms, gender diversity was virtually nonexistent.

The Urban Land Institute, which has launched a Women’s Leadership Initiative, found that women make up 25 percent of its membership, but account for only 14 percent of its CEOs. In fact, a ULI survey found that 93 percent of female CEOs oversee small firms with fewer than 100 employees. Few are responsible for running the industry’s larger enterprises.13

The lack of diversity in Corporate America in general, and in real estate in particular, is entrenched and has remained immune to quick fixes. Closing these gaps takes action that is driven by commitment from the highest levels of the organization. The solution is for organizations to understand the business case for greater diversity in all forms. If diversity is viewed only as being “a good idea” or “politically correct,” it will likely not get the attention it deserves from senior leadership. The business case, however, makes diversity an imperative for business. A diversity of opinions and perspectives leads to healthy debate and better business decisions!

In real estate investment management, there are few female leaders, but they are more prevalent among the REITs, which represent the industry’s NYSE-traded public companies. Those who hold these positions are notable for their experience and results. They, like their peers in other industries, see gender diversity as supportive of critical thinking. Where perspectives differ, dissent occurs in a positive way, leading to more discernment and deeper analysis. And for investors, especially public funds, diversity matters.14

A Diversity Role Model

Across the corporate landscape and well beyond the male-dominated auto industry, General Motors CEO Mary Barra stands as an example of a woman and a working mother who “stayed in the game” and rose to the top. This kind of visibility for senior women leadership is crucial, particularly in male-dominated industries.

Barra has topped the list of Fortune‘s Most Powerful Women; she was honored in 2016 for a “year of dramatic improvement at the $152.4 billion in revenues auto giant.” Fortune credited her with steering GM through a crisis when it was discovered that faulty ignition switches in GM vehicles had been blamed for several deaths and more than a hundred injuries. Barra’s response to the crisis was called “remarkable” and a departure from how GM typically handled such events in the past: she cooperated fully with investigators and quickly reached a $900 million settlement with the Justice Department. She also seized the opportunity to use the crisis as a catalyst to change GM’s culture. No more “patched and dispatched,” which was the old GM way. Instead, Barra told employees at a town hall meeting: “I never want to put this behind us. I want to put this painful experience permanently in our collective memories.”15

Barra’s choice as CEO was a departure for GM for another reason: unlike the five previous CEOs, Barra was an engineer and had a back- ground in global product development. (The prior CEOs were focused on financial management and had less focus on the consumer.) But with a unique background — professionally and by her gender — Barra is able to bring a fresh perspective to running the automaker. Barra and the senior women in real estate serve as role models for others who are not represented in the leadership ranks today. By their example, they declare: “I got here, so you can, too.”

Bedrock of Leadership

Humility and integrity form the bedrock of leadership. Great leaders in all fields and throughout history demonstrated the importance of adhering to moral and ethical principles. Similarly, in the real estate industry, integrity is critical in establishing trust with partners, investors, lenders, and stakeholders and achieving organizational success.

Great leaders in real estate put a premium on reputation. Real estate is a risky business — in fact, riskier than many, given the industry’s cyclicality, its capital intensity, and the volatility of the development business. Integrity leads to sensible deals, which lead to sounder business decisions, and better returns in the future. But without integrity, long-term success is elusive.

At the same time, great leaders never forget where they came from, no matter how far they have risen since their early days. Some had humble beginnings; some began at the bottom and worked their way up. To a person, those who are best known and most respected in real estate recount their stories as journeys in which lessons were imparted by bosses, colleagues, and mentors. They never forget their roots, and never cease to acknowledge those who have helped them.

Most of all, and as we will see throughout this book, high-integrity leaders exhibit values-driven behaviors. They do the right thing based on their principles and moral code. They do not seek to do only what is personally expedient or convenient. Rather, they are motivated to do what is best for others, in alignment with their values and principles. At the end of the day, that is the true “secret sauce” — keeping one’s values and principles at the center of every decision made and action taken.


  • William Ferguson, Leading for the Long Term: European Real Estate Executives on Leadership and Management, Urban Land Institute, 2014.
  • Doris Kearns Goodwin, Team of Rivals: The Political Genius of Abraham.
  • Goodwin, Team of Rivals.
  • PwC, “Real Estate 2020: Building the Future.”
  • William Ferguson, Market Discipline – The Competitive Advantage: Lessons from Canada’s Real Estate Leaders, Real Property Association of Canada, 2012.
  • William Ferguson, Keepers of the Castle: Real Estate Executives on Leadership and Management, Urban Land Institute, 2009.
  • Ibid.
  • Matt Chaban (Aug. 17, 2011). “Jonathan Gray, Blackstone’s Real Estate Wizard Behind the ” Observer.
  • Ibid.
  • Ibid.
  • Ibid.
  •, “Women CEOs of the S&P 500.”
  • Urban Land Institute, Women’s Leadership Initiative, WLI Research.
  • FPL Advisory Group, “Closing the Gender Gap at the Top of Organizations: Lessons for the Real Estate Industry to Learn from Corporate America,”
  • Geoff Colvin, “Mary Barra’s (Unexpected) Opportunity,” 18, 2014, Fortune.

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