Underwriting: Windshield or Rear View Mirror?

As far as I am aware of, in every investment vehicle whether it be stocks, bonds, crypto or crop futures, there is a broad spectrum of risk tolerances. From your CPA conservatives to the, "Ready, Fire...Aim" mavericks.

Commercial Real Estate investments are no different. But when we underwrite the deal, where are we looking. Forward, backwards, 360 spin? Increasingly, the uncertainty of the present market seems to be driving many to cling to the past, like a warm blanket. Because it is easier to look at the reports and spreadsheets of last year and think we can project what the next year will look like. But is this the most accurate way to understand the true value of an asset?

For example, if your management company has a staffing issue that affects cost control (expenses for some properties can balloon seemingly overnight without constant supervision,) or the leasing team loses focus and the necessary activities (pre-leasing, tenant screening, space buildout or unit turns) drag on well past market norms. A blip on the radar in the life of a physical asset, but one bad quarter on a T12 and suddenly the asset takes a 20% dive in value even when you can definitively show a course correction in real time? The use of artificial intelligence may streamline this process in the coming years, but for right now, can we just have a dialogue on the realities of investing? There are few steady growth models that ever line up with our proformas over the long haul. Something always happens. If we know this, then why do we accept a straight line path for either positive or negative? It seems to me that we all could rely less on the spreadsheet and more on collaborative communication to better understand the particular hurdles for each stakeholder in every investment. I certainly plan to.