Commercial Real Estate Today: Doug Motley Of JLAM On 5 Things You Need to Create a Highly Successful Career in the Commercial Real Estate Industry Today

An interview with Aron Weiner

Life is all about relationships, and your career is no different. Building relationships, though, is different from networking, which is just meeting as many people as possible and is more appropriate for when you’re job searching. You should get to actually know people, and spend the time understanding their career, interests, and motivations. Ultimately, people do business with people — especially people they like. If you can be a resource for someone to understand something, it will help people you build relationships. Learn and share with each other. You never know down the road in your career where you may reconnect with someone.

The commercial real estate industry is a dynamic and challenging landscape that offers enormous potential for success. However, it requires a unique blend of skills, knowledge, and aptitude to truly excel. How does one establish themselves in such a competitive field? What does it take to consistently rise to the top in commercial real estate? How does one rise above the headwinds that are challenging the commercial real estate industry today? In this interview series, we are talking to commercial real estate professionals, brokers, investors, leaders of Real Estate Firms and Real Estate Investment Trusts (REITs), as well as anyone who’s found significant success in this industry. As part of this series, we had the pleasure of interviewing Doug Motley.

As one of the managing principals at JLAM, Doug Motley leads the investment team and has over 20 years experience in private equity, real estate and finance. In his career, he has overseen the investment of more than $500 million across multiple real estate investment strategies. A native of Delaware, he graduated magna cum laude from the University of Delaware with a Bachelor of Science in economics, is a member of the Private Equity CFO Association, is a Governor-appointed member and Vice Chair of the State of Delaware Council on Housing, and holds the Chartered Financial Analyst designation.

Thank you so much for joining us in this interview series! Before we dive in, our readers would like to learn a bit about your origin story. Can you share with us a bit about your childhood and how you grew up?

I’m a Delaware native, and grew up in a family of modest means — my mom was a school teacher and my dad was a small business owner. I attended public school growing up and developed the trait to challenge myself to learn, to really push how much I could digest. I also played a number of competitive sports and spent a lot of time outdoors. I earned a scholarhsip and attended University of Delaware, majoring in economics with a minor in business.

Can you share with us the ‘backstory’ of how you got into the real estate business?

After college, I started in the Management Development Program at MBNA — a global consumer bank. I spent five years in various strategy and finance-related positions there, and learned an amazing amount about leadership, finance, analysis, and problem-solving…but wasn’t totally fulfilled.

A close friend of mine introduced me to a client of his who was a young real estate developer. We hit it off and after seeing how rewarding it could be to create exciting projects from nothing, shortly thereafter I took my first job in real estate as a VP of Finance for a regional development company. At this point, I had made one real estate investment — buying a home — and I probably did that pretty poorly. I’m truly grateful my boss at the time was willing to take a risk on me.

Within six months, I was tapped for the CFO role. Over the next three years, I learned every aspect of development, from entitlements to project financing. As the GFC was beginning to take hold, I saw an opportunity to launch my own firm. Over the next several years, I co-founded several companies and this process was where everything all connected for me.

My modest financial means growing up really made me value every dollar I earned. As my career progressed in real estate, I saw the long-term wealth building potential that real estate investments can offer. Historically, theses type of investments have been accessible only by large institutions and a small set of individuals — and I get very excited about being able to help a wider audience benefit from, and build wealth by, having access to the attractive investment opportunities we can provide. I truly enjoy educating people about real estate investing and helping them find the right ways to use real estate investing to accomplish their goals.

Can you tell us about your company and what makes it stand out?

My partner, Nick Hammonds, and I met early in our careers at MBNA. This company had a tenet, “Think of Yourself as a Customer”, which was painted above every door in every facility. This concept stuck with us, and when we started JLAM, we began with the foundation that creating and investing in places people want to be — our version of thinking like the customer — will lead to excellent long-term results. Our belief that creating differentiated real estate, places people want to go to work or call home, will have a powerful flywheel effect that translates into investment performance by generating higher prices and rents, faster sales and leasing, and higher occupancy rates, which increases profits and drives higher returns for our partners. Our excellent track record will attract more capital and position us to invest in and create even more truly special places for people to live and work.

Can you tell our readers about the most exciting new projects you are working on now?

We have spent the last 2 years building a pipeline of build-for-rent projects. The BFR sector is prominent in the Southeast and Southwest US, but has not taken off in our local markets. We now have these projects coming out of entitlements and starting to get underway. In January, we broke ground on the first of these BFR projects in a great location in Milford, DE. This is one of the fastest growing areas in Delaware, and we’re excited to bring 203 rental town homes to the market. We expect to begin building construction before year-end, and our first residents to move in starting in the spring of 2024.

Another exciting project we have underway is a ground-up multi-family development called Sunset Village. This project will bring 238 multi-family units to a significantly underserved central Delaware location. We have designed a resort-style amenity package, and the spacious units feature high ceilings, upgraded kitchens and flooring, and private balconies. All of this is tucked into a wooded enclave providing a serene community feel, but in close proximity to all of the area’s new shopping and dining.

As with any career path, the commercial real estate industry comes with its own set of challenges. Could you elaborate on some of the significant challenges you faced in your career and how you managed to overcome them?

I transitioned from banking to real estate in 2006. Shortly thereafter, the market conditions started to deteriorate. Then I left the comforts of being an “employee” and started my own firm with a small amount of seed money. Not long after, the GFC took full hold, with financial markets crashing across the globe. Needless to say, I was really second-guessing my choices. But, while there was a good bit of unexpected stress, I was also really enjoying what I was doing.

My partner and I doubled-down on our commitment, found ways to generate ancillary revenue to keep the lights on, and kept our eyes open for opportunities. By extending the runway, we were able to envision, engage, and ultimately finalize the opportunity that started JLAM. The amazing success we have had growing JLAM would likely not have happened without those challenging times, and seeing the impact our business is having would not be as rewarding had we not had to fight through the tough times.

Ok, let’s now move to the main part of our interview about commercial real estate. What are the 3 things that most excite you about the industry now? Why?

The first thing that is exciting to me right now is something that is always there — there is always an opportunity to find a piece of property, or an existing asset, that has the potential to be transformed into a vibrant and dynamic real estate project. We have demonstrated that our philosophy of creating places people want to be works in all market cycles and provides a much more durable and productive investment over the long-term.

The second and third things are more thematic, and are aligned with how we develop our investment strategies. The first one here is residential real estate. From a macro standpoint, the US has a housing shortage of 3 to 7 million (depending on the source) homes. The US population is also continuing to grow. We are bullish on the long-term potential of housing, which includes for-sale projects, traditional multi-family, and particularly the build-for-rent sector. With the current dynamics of high interest rates coupled with very low resale inventory, the current opportunities are pretty compelling.

The next exciting area of real estate right now is the dislocation in the financial, or lending, markets. We’re coming off of almost 10 years of easy credit at low rates. The lending environment has changed very quickly with the rapid Fed rate hiking, subsequent bank failures, run-off in bank deposits, and increased regulatory pressure and capital requirements. These dynamics have resulted in a monumental pullback in bank lending at a time when there are significant amounts of commercial real estate loans maturing — approximately $1.5 trillion over the next 3 years. This means there are many borrowers needing to refinance, with lenders who are not willing to refinance the loan. This dislocation will likely create distressed situations — loan sales by lenders, borrower defaults, discounted payoffs, and demand for gap financing — that present compelling investment opportunities. We’re really excited about the opportunity set here, particularly given our experience as a developer and operator, which puts us in a unique position to select, manage, and maximize each investment — whether that be debt or equity.

What are the 3 things that concern you about it? Why? What should be done to address and alleviate those concerns?

The single biggest concern I have is that the extent of the Fed’s hawkish monetary policy will result in a recssion while inflation remains persistent. An extended period of stagflation could result in a corresponding extended downturn in the real estate market. We’re optimistic that the Fed’s actions, which typically have at least a 12-month lag until their effect takes hold, effectively tame inflation and a moderation in interest rates will enable a soft landing.

While supply chain issues have certainly subsided since the height of the pandemic, there are certain materials (electrical gear for example) that continue to face extremely long lead times. The uncertainty and variability around procurement timing can result in significant impacts to projects under construction, which is a major challenge for developers. While slowing construction resulting from a slowing economy (induced by rate hikes) may help alleviate this issue, additional supplier investment to increase domestic production capabilities would help to address the capacity issues. However, higher interest rates make it less likely that suppliers and manufacturers are willing and able to make large capital investments in plants and factories to increase their production.

A third concern, and one which is likely to prevail for an extended period of time, is the availability of construction labor. The construction workforce is generally an older demographic that is not having younger/new participants enter at the same rate as workers are retiring/exiting. The constraint on labor will keep costs high and limit the amount of production in certain skilled trades. I think the solution is multi-faceted, with the primary driver being growth in trade schools (including more marketing of them, financial support for students, etc). A secondary lever could be resolution to immigration policy that would enable more laborers to legally enter and join the domestic workforce.

If you had the power to put in place 3 changes to improve or reform the industry, what would you suggest? Please share stories or examples, if possible.

I don’t think there is a lot of awareness about all of the careers available in the real estate industry. While there are some fantastic real-estate-specific programs in universities across the country, there are many that have limited (or no) real estate curriculum. I think if we could raise awareness about the many exciting career opportunities out there, and couple that with more real estate programs at colleges & universities, we could bring many new people into the industry who otherwise would go elsewhere.

Along the same lines, I’d love to see more diversity across the industry. When I attend conferences, you can look around and see how much opportunity there is to bring a broader background of people into the industry. This certainly applies to women in real estate, particularly in development and investment roles. Over the last several years, we have sought out female applicants for certain development and investment positions at our firm, and I was disappointed at our ability to find potential candidiates. I think continuing to promote the many Women in Real Estate groups that exist will help with this, but it would be great to see a more structured internship program (possibly organized by industry groups like ULI or ICSC, or investment organizations like the CFA Institute) to help facilitate connecting interested candidiates and students with employers.

One of the things I love most about this business is the people I have met, the tremendous friends and relationships I have made, and the opportunity to do business with quality people. I’m sure there are many awesome people out there I haven’t yet had the chance to meet or work with. I have been to industry events with people just looking to sell you something or what’s in it for them, but I’ve been to other meetings and conferences that are just people interested in building relationships, helping others, and learning. If I could wave my magic wand, it would be great to have more opportunities to interact with — and build relationships with — more of the amazing people in our industry.

How has technology changed the commercial real estate industry, and how do you foresee it shaping the future of the sector?”

Technology has a immeasurable impact across the industry, from using drones and complex modeling to optimize site plan engineering, to data services to enhance underwriting and analytics. At JLAM, we have invested significantly in technology across our platform to enable us to scale our business while keeping a lean team. This includes marketing and CRM, investor management, project management, financial analysis, and other back office infrastructure.

I anticipate tech’s impact will continue to grow, and the firms that are paying attention, those that figure out how best to apply things like generative AI into their business, will secure a competitive advantage in the market.

I think we’ll see that it will take a well-thought-out method of combining technology with the vision and experience we have as expert investors to use these new tools in a risk-controlled and optimized way.

I am hearing the phrase “Stay alive until 2025” a lot. What is your plan to survive in the current market?

First, since our inception, we have maintained a conservative balance sheet and a firm commitment to our people and our investors. This approach gives us the staying power to make it through a prolonged downturn, should one occur. That being said, we believe opportunities exist in all markets and there are always properties that can be acquired and developed or repositioned to hit unmet demand.

While market conditions are challenging, and we expect some headwinds for the next year or two, we are excited about our ability to grow by seizing on current and upcoming opportunities. We carefully positioned our existing portfolio with modest leverage at attractive long-term fixed rates. In addition, we have a significant pipeline of development projects that are well-suited to capitlize on the housing market dynamics (shortage of housing units, growing population, low resale inventory, and high mortgage rates). Lastly, we are preparing to launch an opportunity fund to capitalize on the pending dislocation and stress driven by the rapidly changing lending environment. This vehicle will enable our investment partners to access and benefit from the compelling opportunities to acquire distressed real estate and loans secured by real estate at very attractive values. Our long track record evaluating, operating, and creating value across the real estate spectrum puts us in a unique position to maximize returns while managing downside risk, and we’re really excited about the growth potential this opportunity offers.

For a young person who would like to eventually make a career in commercial real estate, which skills and subjects do they need to learn?

Problem-solving is a critical element to so many things in real estate. Having the ability to think critically to identify the true issue and structure a way to analyze and resolve that issue is a skill that will pay dividends in almost any area of real estate (and beyond).

I would also strongly suggest having a firm grasp of the financials of real estate investments — how money moves, from a cash flow standpoint, as well as the tax implications of various investments. And ultimately, have a strong understanding of modeling (Excel is the backbone of many analyses). Regardless of where your career takes you in real estate, being able to accurately analyze a deal, investment, project, etc. is invaluable.

And lastly, learn how to effectively collaborate and work with others. This may be people who manage you, people you manage, or people you interact with outside of your company, but you will need to understand how to collaborate, motivate, and negotiate.

When evaluating deals or opportunities in real estate, what are the most important factors you look for and why? Can you provide some examples?

Our investment philosophy is anchored in the key tenet of investing in and creating places people want to be. Whether this is a workplace where people are proud to show up every day, or a community where people are proud to call home, we are deeply committed to creating differentiated properties. This approach permeates how we evaluate all of our deals — for development projects, we look for unique physical elements of a property we can incorporate into a development plan to create special features (examples of this could include existing structures we could creatively repurpose, natural features like ponds, woods, or rolling hills); for acquisitions, we consider how the physical space of the asset can be differentiated, what the surrounding amenities and experiences can offer, and how the location may impact potential users (this could include high ceilings that could be exposed for a cool look, dynamic restaurants and bars nearby, or the ability to add creative and valuable on-site amenities for tenants to use). We combine these elements with rigorous financial analysis and due diligence processes, ensuring the risk/return profile is appropriate for the investment strategy and our investment objectives.

Can you share a story with us about the hardest deal you made, that ended successfully for you?

Our first multi-family development project was a challenging one. We had identified an opportunity based on a severe shortage of rental housing, a very dated competitive set, unaffordability of for-sale options, and growing demand. While we had done an extensive amount of research substantiating our thesis, and had deep knowledge of the market, securing the funding was a demanding process. The capital markets had not yet adopted multi-family as its darling, and it took an unbelievable amount of work with our primary lender to get them to commit to the deal. At the same time, we needed to invest significant time with our equity investors, walking them through the minute details of the deal, market dynamics, and construction plans. Through demonstrating our knowledge of every aspect of the project, market, competition, risks, and opportunities, we were able to successfully secure the funding in time to get the transaction closed. Our preparation and proven execution processes enabled us to deliver the project as planned, and the demand far exceeded our expectations. We secured long-term fixed rate financing upon stabilization, and the project continues to deliver excellent returns for our very satisfied investors.

This deal, and many others we have executed like it, are a testament to our reputation, vision to see opportunity where others do not, comprehensive evaluation processes, and execution capabilities.

Ok, here is the main question of our interview. Based on your personal experience and success, can you please share “Five Things You Need To Create A Highly Successful Career In The Commercial Real Estate Industry”?

1 . You should start your career with a larger organization, especially companies that prioritize education. Here you can increase your exposure within the industry, learn their processes and structure, and why they use them. This is important — at the development and investment firm that I am one of the managing principals at, we have incorporated the best practices and meticulous processes of big companies, yet we’re small enough to avoid the bureaucracy and can be agile when the market presents opportunistic investments. Also you should interact with as many of your colleagues in other departments as you can. Learn how they analyze opportunities, fund deals, or develop budgets to enable execution at scale will provide a baseline structure for your own thinking.

2 . It is critical to learn the numbers/data, and the most direct way to do this is through an analyst role. There are other ways too, if you’re unable to get an analyst position. The goal is to learn how money moves, what drives returns in commercial real estate, and how to evaluate deals and measure performance. Knowing the right key performance indicators (KPIs) that correlate to success is one of the most important career lessons you can learn, because some KPIs are just vanity metrics. “Listen to the back of the envelope,” which means you should absorb why the most experienced in the company operate a certain way, and pay attention to where there are varying opinions and why.

3 . Life is all about relationships, and your career is no different. Building relationships, though, is different from networking, which is just meeting as many people as possible and is more appropriate for when you’re job searching. You should get to actually know people, and spend the time understanding their career, interests, and motivations. Ultimately, people do business with people — especially people they like. If you can be a resource for someone to understand something, it will help people you build relationships. Learn and share with each other. You never know down the road in your career where you may reconnect with someone.

4 . Growth mindset is a term that’s used a lot, and there’s a reason why — you should never stop learning. This doesn’t mean just learning the basics of real estate investment, development, finance, construction, etc. You should consume as much knowledge as you can — read books, magazines, blogs, research reports, etc. Listen to podcasts, attend webinars and conferences, however you can learn, even if you’re only taking away one new piece of information. The real estate market, capital markets, and demographics are constantly changing, and the same is true with investment preferences, design trends, and underlying fundamentals. You should keep your eyes open as you go through life and pay attention to what seems to work compared to what doesn’t — and analyze why you think it’s not working. There’s an old saying, “I can’t tell you what makes great art, but I can list 1,000 reasons why it’s bad art.” Even if you can’t place your finger on why a commercial real estate asset is great, do your best to find out why, and always think about the pratfalls that property avoided to prevent mediocrity — or worse.

5 . I am a firm believer in hands-on experience, so if you can get some field experience, it will help you immensely. You need to understand the real complexities of schedule management, budgets, staff, and contractors, and how they impact the plans, funds, and project performance. You also need to learn how end users (buyers, tenants, etc) interact with your representatives. Do your best to see if you can observe how the experts handle challenging situations, mitigate risks, see things coming, etc. How do they deal with the myriad of issues that come up while operating at scale? What are their systems and processes? This is why I firmly believe starting your career at a large organization puts you on the right path.

Do you have three things you would advise a new real estate professional to avoid?

I would avoid overconfidence. Having early success is great, but remember that there are always new challenges that come up, new things you haven’t seen before, and you need to stay mindful of how to manage your risk.

I would avoid trying to do things by yourself. Even if you are a one-person shop, you need to find trusted advisors, partners, and service providers. For example, having a trusted attorney that takes the time to understand your business, the transaction, and your objectives is unbelieavbly valuable.

I would avoid thinking real estate is a zero sum game. Someone else doesn’t have to lose for you to win. Try to find win-win scenarios. And if someone else has success, be supportive, not jealous. Their success is not at your expense.

What advice would you give to another real estate professional about improving the work culture, building team morale, and helping each employee thrive?

Start with a clear mission that drives what you and your company do, and have this mission front and center all the time. Carefully build your team, finding the right backgrounds and experiences that complement each other and enable you to achieve more as a company. Make sure you emphasize attracting, hiring, and retaining top talent who are aligned with your stated mission — people who want rewarding work to do, new challenges to overcome, have an entrepreneurial spirit, possess a refuse-to-lose mentality, and are rooted by the principle of always doing the right thing. Once you have the right people in the right seats, empower them! Let them leverage their expertise and skills, while you provide the mentorship and support for them to learn. Fuel them to grow with the company, maximize their performance, and expand their role and career trajectory. Help them become experts at what they do, while also encouraging collaboration and continuous learning.

What is your favorite “Life Lesson Quote”? Can you share a story of how that had relevance to your own life?

I’ll have a little fun with this one. “The more that you read, the more things you will know. The more that you learn, the more places you’ll go.” -Dr. Seuss

In 2014 I completed the CFA curriculum and series of tests and subsequently earned the prestigious Chartered Financial Analyst designation. This was the culmination of several years learning the knowledge set and passing the trio of rigorous tests. This was a professional journey that provided an unbelievable learning experience that continues to improve my investing every day.

On the personal side, about 3 years ago, the stars aligned such that I had the opportunity to pursue a lifelong dream — getting my private pilot’s license. After a year of studying, practice, and testing, I successfully earned my license. Since then, I have been enjoying the amazing new world of experiences and freedom that hopping in a small plane affords. So, I can attest to Dr. Seuss’s quote — the more that you learn, the more places you’ll go!

You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 😊

I would enable more creative types of development of housing. We have such a shortage of housing in the US, and much of the housing is unaffordable for many. The existing housing stock is largely detached single family homes. Across the country, many developers (and elected officials) are faced with opposition to higher density housing (often referred to as NIMBYism — or Not In My Back Yard). If we could increase the development of cottages, town homes, duplexes, garage apartments/ancillary dwellings, and beyond, I think we could make a material impact in the availability of quality, attainable housing for many more people across the country.

How can our readers further follow your work online?

They can subscribe to our blog at www.jlamre.com, follow our company page Jack Lingo Asset Management on LinkedIn, or subscribe to our YouTube channel.

This was very inspiring. Thank you so much for joining us!