While the residential real estate sector has slowed, business remains strong in the commercial property sector, and hiring and compensation continue on an upswing. That's good news for students going into real estate or professionals moving up the career ladder - but, if you're an employer, it's a different story. There is a major shortage of qualified employees right now, and it's only going to get worse. That's why industry experts Stan Ross and Anthony J. LoPinto urge real estate companies to get proactive in finding and nurturing good candidates.
"There just isn't enough talent available, whether in numbers of people or in the level of experience and skills required, to fill increasingly sophisticated and demanding positions, especially for seasoned professionals in finance, accounting, and development," says Ross, chairman of the board of the University of Southern California's Lusk Center for Real Estate and author (with James Carberry) of The Inside Track to Careers in Real Estate
. "The shortage will continue to affect all areas of commercial real estate-development, finance, asset, property or project management, and leasing.
"If the leaders with the real skin in the game don't take action, who will?" Ross adds, saying, "Now is the time to start seeking and developing the right people to fill critical positions and build a strong bench." LoPinto, CEO at New York City-based Equinox Partners, comments, "Demand for development and acquisition talent will continue unabated." In a hot job market, LoPinto says he expects recruiting activity to remain strong.
A survey by an online job board for the commercial real estate industry found that industry job postings increased 35 percent in the first quarter of 2007, and most employers and senior executives expected hiring and compensation to continue to increase at least through 2007.
Understanding the Talent Shortage
The commercial property boom has spotlighted a vexing problem for employers: a growing shortage of talent. To be sure, the next cyclical downturn in commercial real estate, whenever it happens, could alleviate some of the pressure. Nevertheless, the long-term trend is that as the commercial real estate sector continues to grow, the supply of talent will not keep pace with demand.
"Real estate companies are competing not only with each other for talent, but with the service sector generally," explains Ross. "A principal reason is that, during the last big downturn in commercial real estate, roughly from the early to the late 1990s, fewer people went into real estate, and more went into then-booming technology and other industries. Along the way, the commercial property industry lost almost an entire decade of talent. Just look around most any large real estate company today."
What this means is there is now a shortage of people in their 30s and early 40s in commercial real estate. That shortage has been aggravated by the fact that more and more senior professionals - the Baby Boomers - are reaching the end of highly successful careers, cashing in their chips, and moving on to other pursuits. Furthermore, some entrepreneurs have made their fortunes in commercial real estate at a very young age and turned the management of their companies over to others - or sold their businesses. Others are continuing to manage real estate portfolios, for themselves or others, but their primary interests now lie outside of real estate. The upshot is that, in these entrepreneurs, real estate has lost some of its best talent.
Meanwhile, commercial real estate companies are continuing to grow, and investors are putting more capital into commercial properties, which, in turn, is creating more demand for professionals with the skills to help manage increasingly large and complex companies and portfolios. Professionals with finance and accounting backgrounds, for example, are in particular demand. Talk to most any CEO or other senior person in real estate today and the conversation soon moves to the talent shortage. This has not been lost on today's students, who are beginning to give the same consideration to real estate careers as to those in law, engineering, medicine, or other professions.
Ross and LoPinto offer the following tips for how to seek out and attract talented individuals:
· Don't settle for warm bodies.
· Focus your search inside the industry.
· Make HR a strategic position.
· Build relationships with colleges and universities that are a prime source of talent.
· Seek out seasoned industry players.
Once you find and hire good employees, do everything within your power to keep them, advises Ross. It won't be easy given the wealth of opportunity that currently exists in the industry, so make it a priority.
"It can be especially challenging to hold onto young, smart, talented people who work in the industry for a few years," he notes. "They are often lured into positions with private equity funds, commercial banks, and other organizations that can utilize their real estate expertise. Be sure to pay them well, but, even more importantly, create the kind of organizational culture that's tough to leave. Your people are everything - treat them well and they'll return the favor."
This information was provided with permission from the authors. Stan Ross is chairman of the board of the University of Southern California's Lusk Center for Real Estate. The Urban Land Institute (www.uli.org) is a non-profit education and research institute that provides responsible leadership in the use of land in order to enhance the total environment.