Weekend Interview: NAIOP Maryland President Kate Jordan On Finding Opportunity Amid Downturns

This series goes deep with some of the most compelling figures in commercial real estate: the deal-makers, the game-changers, the city-shapers and the larger-than-life personalities who keep CRE interesting.

Kate Jordan’s career in commercial real estate started at precisely the wrong or the right time, depending on your perspective. 

She first considered pursuing a real estate career while working at a family insurance company in Baltimore’s Canton neighborhood. At that time, a steady parade of residential real estate investors were flipping homes in the community and the deals intrigued her.  

But shortly after, the economic outlook changed drastically. The residential mortgage bubble that enabled the flipping boon had popped, spreading financial poison to the broader economy via mortgage-backed securities that eventually metastasized as the Great Recession.

Facing a flagging economy defined by crippled credit markets and businesses slashing spending in desperate bids to stay afloat, Jordan launched her career in commercial real estate.

“I  started in '07 or early '08 — a great time to start," Jordan said, adding that she made around $12K in her first year and $36K in her second.  

"I'm still here,” she said with a laugh. “So it was worth it.”

Jordan managed to stick it out and thrive through the coronavirus pandemic and the economic turmoil that has roiled commercial real estate in recent years.  She is now a principal at Lee & Associates Maryland, and last month was named the fourth woman to serve as the president of the commercial real estate advocacy group NAIOP Maryland in its 40-year history. 

She spoke with Bisnow about her career, her thoughts on the commercial real estate market and why she never thought much about the role of gender in her career until recently. 

This interview has been edited for length and clarity.

Bisnow: You recently became president of NAIOP Maryland. Why did you decide to serve in that capacity? 

Jordan: As with everything else, baby steps led me down this path. And the next thing you know, the path becomes your future. 

One of the things NAIOP has always focused heavily on is developing leaders. Many years ago, I was lucky enough to be encouraged to go to a developing leaders dinner where [Merritt Properties President] Rob Merritt spoke. When I say spoke, about 20 of us sat around some dinner tables … I'm thinking, “I have no business having dinner with Rob Merritt. This is amazing. I can ask him a question, and he's just talking to me like a friend.”

The conversations I'm involved in, because I have face time with these people, are invaluable. I always say it's not about getting deals out of it. It's about having advocates for you when you're not in the room and then being able to pay that back to others to advocate for them when they're not in the room.

The work that we're doing from a legislative standpoint is under the radar. But we have a full-time lobbyist in Annapolis … We have a call every Monday during the legislative session to review the bills introduced, and different people weigh in.

We have attorneys, engineers and all the people involved in development sit there, and we talk about each bill … I don't think the industry realizes how much time and effort goes into the legislative efforts. 

For me, that's been the biggest learning curve. 

Bisnow: You're the fourth woman in NAIOP Maryland's 40-year history to serve as president. What, if any, special significance does that hold for you?

Jordan: I have never been one of those people who thought my gender was necessarily a big deal in my career. Because I just work hard and try to do all the right things. 

When I became a mother, I realized that women sometimes have different challenges than men. I have a daughter, [and] that’s made me step back and think differently about how I carry myself and my decisions. 

I've sometimes been a little brazen about disregarding whether my gender impacted my path or not because I just powered through. That's what I do. And maybe other people aren't in the same position as I was to be able to do that. 

So, for instance, when I first had my daughter ... I told my clients, 'I can't talk to you between 5 and 8 p.m. because that's the three hours a day I get with my daughter.'

Luckily, I was in a place in my career where I could say that. So part of why I did that is so that the woman after me can say, “Hey, that's how Kate did it, and her clients still respected her, and she always got her work done.”

Bisnow: How has your focus evolved over your career? What kind of deals do you like doing? 

Jordan: I could not have started at a worse time and was extremely lucky. I had three senior brokers, who I still have great relationships with, and they gave me all of the hardest and smallest properties they had, which were all industrial. But that was great because little properties lease when things are good, and little properties lease when things are bad because people are either starting a new business or downsizing. That helped me learn the business through tons of transactions.

I also had opportunities to do some [challenging] things. I worked on a shopping center at Route 1 and [Route] 175, which let me tell you how fun it is to try to lease a shopping center across from a prison. Back then, I couldn't give away this retail space. Now I'm getting these crazy numbers on these warehouses down the street. To come full circle, I helped a client buy a piece of land [down the street from the shopping center] before COVID, and he’s built one of the most beautiful warehouses I've ever seen for his Porsche racing business.

I like to work on stuff that's a little bit tricky. That takes a different set of eyes. But I also do a lot of vanilla industrial leasing and that's great. I love it. The clients are great.

Bisnow: What are you seeing in the property sectors you focus on? What have things been like in terms of demand from clients and vice versa?

Jordan: We are so lucky to live where we live geographically. Our proximity to D.C. and, obviously, Baltimore keeps us insulated. 

The federal government is not going anywhere. So even during the worst times, we've stayed afloat better than people in other markets. We have incredible hospital systems. We have incredible higher education systems here … You have NSA and all of the defense contractor stuff. 

Sometimes it feels embarrassing because we have so much here, and some places have so little.

As an industrial broker, we've seen unprecedented rental rate growth since Covid. A lot of that was driven by e-commerce. But a lot of that was [also] driven by those who had to physically go to work during Covid. The majority of [those workers] were people that were somehow associated with a warehouse, and so that has persisted.

Even as our vacancy rates have slowed slightly over the last quarter or so, there's still strong demand. Frankly, I'm seeing a lot of people coming out who have locked in long-term, good rates. They need more space but don't want to move because they don't want to lose the good rate. 

So they're doing 18-month to two-year leases and paying a premium. But their rate on their existing warehouse is so low that even though they've outgrown it, they don't want to let that go. They could be in a place where they might be paying like $7 to $8 a foot, and now that space is $14, $15 or $16 a square foot. So, to go to market, there's absolutely no point. Instead, they're taking these extra spots. 

I'm seeing a lot of that, which is great for landlords because, typically, there'll be solid credit. It's not like these people are fly by night. 

I do enough office to know that the suburban office in our market has done pretty well as long as you're in a Class-A building. A lot of Class-C will start to be redeveloped. The big question is what happens to the [Class] B, with this whole question of return to work and things like that. 

As far as brokers are concerned, there will always be an opportunity. We make money when people move. If they're getting bigger, we make money. If they're getting smaller, we make money. As long as people are moving we're making money. It should make brokers happy. Even if you're downsizing people, you're probably taking them from a B space to an A space. 

Bisnow: Make a bold prediction for the rest of the year.

Jordan: There's this children’s book called 'Stuck.' It's about this little kid that keeps throwing stuff in this tree: a duck, a cat and a car. All this stuff gets stuck in the tree. 

We have just been stuck for two years because of the interest rates ... I used to sell between five and 10 buildings a year. I've sold like two buildings a year for the last couple of years. It's been all leasing. 

It's been this crazy situation where the properties are still worth a lot because there's no place to move. So, the rental rates continue to grow but the interest rates are stuck. So we're stuck. You can throw whatever you want at it, but we're stuck. There's nothing we can do. 

We're getting to a point where we'll start to see sales shake loose. People will come to terms with the fact that the rates are a lot higher than they used to be, and this is the new reality because people have been Band-Aiding things for the last two years. Eventually, you need to get stitches or move on and hope it heals. 

Those who want to buy will find a way to buy a smaller building or a building in a cheaper area. Those who want to sell will be slightly more flexible with their purchase price or hold part of the mortgage. A lot of owners have loans coming due, and when they look at the refinancing they're going to think, 'This is crazy. I'm jumping three points. I can't afford to do this. Let's just sell it.'

But there will be more sales this year than in the last two. So that's my bold prediction.

Bisnow: What is your weekend routine or your favorite weekend activity? 

Jordan: I work hard all week, and my favorite is spending time with my family. I wake up early, get my dog walked, go to my favorite coffee shop and then just spend time with them, go to the park or go out on the boat. My daughter loves art, so we do a lot of arts and crafts, a lot of sidewalk chalk … Bubbles, lots of bubbles in my life. Yeah, I just enjoy being a mom and a wife. I wish I could tell you something more exciting, but to me, it's the most exciting thing possible.