The inevitable rise of record-low interest rates

Interest rates have been abnormally low for an unusually long time.

Rising inflation was the trigger for interest rates inevitably rising from their record lows sooner than many people expected.

I’m not sure if we are heading for a big economic turndown, are already in the middle of one, or if now is just an adjustment phase.

However, I do believe there is a case for expanding while others are contracting (whether that’s during an economic downturn, or even when there's just talk of one!)

Find out how growth-oriented operators are responding to current market conditions in episode 107 of CRE Success: The Podcast.

And. for tailored support with expanding your commercial real estate business, click here now, and let’s make a plan together!

Episode transcript:

There's a lot of news around at the moment about uncertainty, about doom and gloom about going into a recession.

But rather than be focused on the headlines on the clickbait, I want to talk to you about the opportunities that are present in the market right now.

Hello, and welcome to episode 107 of CRE Success: The Podcast. I'm Darren Krakowiak. I'm your host, and I'm here to help commercial real estate leaders to develop their people and to grow their business.

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Let them know that this content exists. That it's free to listen to anytime. That we are up to episode 107.

Today, we're talking about expanding when others are contracting.

And I think when you offer opportunities for growth to other people, then opportunities for growth will also come to you.

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So, today we're talking about expanding when others are contracting. 

And I think that is a real opportunity right now.

Interest rates have been increasing for the last five or six months. The economy is slowing. There is some debate over how much it is slowing. And there is a lag in the data.

So sometimes we see this slowing economy after it's actually slowed and we might actually be in an upturn again.

I'm not quite sure about that at the moment. But certainly there has been some slowing going on, partly as a result of the rising interest rates that is affected when interest rates go up.

Then a desired impact of interest rates going up is that there's going to be less economic activity to fuel inflation, which of course is also very, very high.

And some people say that perhaps it hasn't yet peaked.

Unemployment as well, which has been at record lows in many countries is also increasing in Australia.

It increased this past month. It went up to 0.1% from 3.4 to 3.5. And again, the headlines around this increase in unemployment was a bit overblown.

That's just a statistical noise is what I like at university when it sort of bounces around like that.

But certainly, the news makers like to make a big deal out of these things.

And that could feed into some of the uncertainty and some of the sentiment.

And one thing that we know about uncertainty is that the market doesn't like uncertainty. and people don't like uncertainty.

Your mind doesn't like uncertainty, it feels more safe when it knows what is going to happen.

And in situations like this when there is some uncertainty about where the economy is heading, and certainly, there are factors that tell us that activity is down, that interest rates are up, that inflation is higher. 

Well, some people can see that as a signal to pull back.

And you might hear people say things like, "Well, we're sort of taking a wait and see approach. We had some plans to grow, we were going to invest in this advertising, we were going to wrap up our capability in this area, we were going to increase capacity in our business here." 

But, given what's going on in the marketplace, we just want to sit back and assess things, and we'll come back to that perhaps in six months. 

And you might feel that you should do the same. You might have some doubts about your own plans to grow during this time, because you're seeing other people pulling back and that can be a signal for you to do the same.

Well, I remember, you probably have heard this statement as well from your parents, when you do something that someone else was doing. 

And that's your excuse for having done it. It's not a very good excuse, right?

The point I'm trying to make is just because other people are pulling back or being a little bit more cautious, that doesn't mean that that's necessarily the right decision for you right now.

So your mother might say, "Well, if everyone else was jumping off a building, would you do that?" and you say, "No", well, maybe you say "Yes", if you're trying to be smart.

So you can be different. You can decide when they Zig I'm going to Zag.

And what if now is exactly the right time for you to be expanding?

What if now is exactly the right time when the most growth that you can achieve is possible than at any other time? This is the time where you can really grow.

Now, I'm not advocating being reckless or being careless.

But I am saying that if you want to move to your own big, we don't want to be overwhelmed by all of the negative noise that's in the marketplace, and letting other people's decisions determine what we're going to do necessarily. 

So I've talked before about not watching the news and really trying to make sure that the negative influences that can impact our mindset, our mood, our decision making. You want to limit those, right?

So we want to be kind to our mind, by not allowing things like social media, sensationalist news, reality TV, these sorts of things, which are kind of like junk food for your brain to influence us.

So stop listening to the news and remember what Warren Buffett said.

You've probably heard this saying before, but it's good to be reminded of it.

It's 'Be fearful when others are being greedy and be greedy, when others are being fearful.'

So, if other people are a little bit cautious right now, that may be the signal to you that now is the time to just be a little bit more aggressive.

Because being aggressive, or at least acting a little bit more now is going to set you up for when things do improve, and they always improve.

And we know from cycles in history, that things will get better.

And I'm not saying that necessarily we are in a downturn. But if you believe that we are, then it may just be that now is the time to start preparing for the recovery. Because relationships take time to build.

If there's that big fish client that you want to do work with, if there is somebody who you are looking to recruit, how long does the recruitment process take? It typically takes months, right?

So you've got to plan for the growth that is inevitably going to come now. Plan now for the growth that is coming.

And when you're doing that, when you're in a place of action, when you are positive about the future, even when there is a little bit of doom and gloom around, I think that you're sending a message to the marketplace that you are different.

People will notice. Not only will potential employees notice but your peers in the marketplace will notice and importantly prospective clients will notice.

And they'll say that, "These are the people who are turning up when other people are pulling back."

One of a few clients who I work with is really aggressive right now with employing new people.

And another one of my clients is actually opening a new office right now in a completely new market, hundreds of kilometers away from his existing office.

In fact, he's always sort of looking for people but the idea for today's episode really came from a conversation about ramping up employment and looking to expand the number of seats in his business.

So these people are seeing the opportunities that exist now.

And they're not putting their plans aside based on the noise that is going on in the marketplace.

Now, if you're not a business owner or leader, the thing that you can decide to do is just to be a little bit more present to turn up for your clients.

Because in uncertain times, clients are going to be more attracted to experts.

Experts are recession proof.

I'm not saying we're headed for recession, but if people believe we are, it can start to have an impact on sentiment.

So, If you're the person who is continually showing up and being a person who is a source of positivity in the marketplace, that's going to position your world, not only for this downturn if there is one, but also for times when people are feeling more uncertain in the future.

Now you might be listening to this episode and think, "The market is not contracting, we're doing just as well as we have always been."

And if that is the case, well then you've got an even bigger advantage because you can continue to keep growing while other people have some doubts.

Now if you want to talk about how to grow your business and develop your people and to keep doing it even in times of uncertainty, and you are a commercial real estate leader, I'd love for you to go to cresuccess.co/leadership.

That's where we've got more information about the program where we work directly with commercial real estate leaders.

It's cresuccess.co/leadership.

But I'm looking for people who are committed to growing their business.

If growth is not something you're interested in, then that is not the program for you.

But if growth is something that you want to achieve and you see the benefit for you and your people in achieving that growth, then definitely let's have a chat.

And the first step to doing that is to look at that page and to leave your details if you're interested.

I really appreciate you listening to today's show. Thank you for being there and I will speak to you soon.