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Preparing for a Future Leadership Transition
NAIOP Research Foundation report identifies best practices in succession planning.
Many commercial real estate leaders are drawn to the industry by opportunities to build something that endures, whether that is a business that can stand the test of time or actual buildings that will shape communities for decades to come. However, individual careers do not last forever.
Succession planning is an important tool for ensuring business continuity and facilitating future leadership transitions. For privately held firms, it can also accomplish other objectives, such as providing an owner with a clear pathway to retirement or keeping ownership within a family. But preparing and implementing a succession plan can be especially challenging for leaders of commercial real estate firms, which often adopt complex asset ownership and taxation strategies and carry obligations to a range of investors and lenders.
The NAIOP Research Foundation’s May 2025 report, “Succession Planning for Commercial Real Estate Firms: Benefits, Best Practices and Common Challenges,” identifies several best practices to help firms navigate the process. The report’s authors, Cory Bultinck and Alex Bratty at Wipfli, drew from Wipfli’s expertise in succession planning as well as interviews with 22 commercial real estate professionals at various stages of the succession planning process to identify challenges and opportunities associated with preparing for a future transition.
The report, produced in collaboration with The DRG, a market research consultancy firm, noted that since firms vary in their size, structure, expertise and goals, there is no single approach to succession planning that works best for all. However, the interviews revealed several common issues that leaders should consider as part of the process and a range of recommendations that can improve succession planning outcomes. The report’s findings are of use to any firm interested in preparing for a future leadership transition and to privately held firms that must also prepare for an eventual transfer of ownership. The report addresses the dynamics involved in succession planning within family-owned firms, including strategies to prepare family members for future leadership.
The authors recommend that leaders start the succession planning process early, especially if they are the firm’s owners. A future exit may seem distant, but the most effective succession plans require time to develop and implement. It can take years to identify potential successors and prepare them with the skills needed to take over a firm. This is particularly true in family firms, where it may also be necessary to identify interim leadership if there is a significant age or experience gap between current owners and their intended successors.
Succession planning is also important for ensuring business continuity by preparing for contingencies such as the death or disability of current owners. Real estate assets are illiquid, and if a firm does not have adequate cash reserves or insurance proceeds to meet its obligations to heirs, investors and creditors upon an owner’s death, it may have to sell assets at below-market rates. It is also common for a firm’s value to be closely linked with the reputation of its leadership. Having a clear succession plan in place can give lenders, investors, clients and employees confidence that successors are ready to take over leadership under any scenario.
Respondents repeatedly highlighted the importance of clear communication throughout the succession planning process. Clear communication among current owners and with potential successors — especially if they are also family members — is fundamental to developing an effective succession plan. Having an open discussion about the future of a firm is not always easy. The report’s authors advise that creating planning teams, establishing a transition committee and working with outside experts can help facilitate difficult conversations and keep the process moving forward. Once a plan is in place, implementing it successfully also requires open communication with successors, employees, investors, lenders and other stakeholders to build confidence in the transition.
Access the report at naiop.org/research-and-publications.
Shawn Moura, Ph.D., is senior research director at NAIOP.
