As Firms Tiptoe Back To Offices, Will CRE See Start Of Rehiring Spree?
Getting Ari Rastegar to talk about real estate opportunities in Austin, Texas, is as simple as asking him a question. Make that any question, because the founder and CEO of Rastegar Property Co. eventually finds a way to bring the conversation back to growth in his hometown, which was recently called the "hottest market in the country" after attracting big new tenants such as Oracle and Tesla.
Rastegar has been bullish on central Texas throughout the coronavirus pandemic. But now, his multifaceted firm, which includes a sizable commercial focus, is hiring like he truly believes it. High-profile hires such as ex-Newmark exec Neal Golden, who the firm recruited last week, highlight how executive talent is in demand and on the move in CRE.
“It’s going gangbusters,” Rastegar told Bisnow. “There’s so much talent in the marketplace from layoffs and Covid, unbelievable people. We’ve never seen this much talent out there. We’re bringing in seasoned C-suite execs and junior middle management.”
The pandemic’s long-term impact on CRE will be felt far into the future. But a recent series of developments — expanding vaccination campaigns, the elimination of restrictions, ramped-up travel, and major corporations such as Google, Amazon and Morgan Stanley choreographing a return to the office — suggest the market is warming up. Data from Real Capital Analytics showed a similar thaw, with U.S. commercial property prices up 6.8% year-over-year in February. And that means hiring, restaffing and office reopenings within CRE itself.
“Starting at the end of February, it seemed like hiring exponentially ramped up, and companies are continuing to hire at a faster pace,” said Carly Glova, president of Building Careers, a commercial real estate talent firm. “We’ve also seen compensation packages increase as well, because now that companies are committed to hiring again, the desire to attract high-quality talent is paramount.”
The demand for executives like Rastegar’s Golden, as part of larger restructuring or strategic repositioning, has been especially pronounced, said Allison Weiss, founder and principal of CRE Recruiting. There’s lots of talent on the market due to Covid-related layoffs and furloughs, and spring is already when execs typically make moves, since it’s when annual bonuses arrive.
“The pace of business has started to change, and companies realize they need those people back,” Weiss said. “I wouldn’t call it a frenzy, but it does feel more like pre-Covid hiring levels.”
There’s still plenty of uncertainty, especially around a possible fourth wave of the coronavirus, so nobody wants to hire and then face the prospect of waiting through additional lockdowns or pauses in business activity. The Green Street Commercial Property Price Index was unchanged, sitting slightly below pre-Covid levels as of early last month. But while the industry slowly regains its footing, certain roles and skills are in higher demand.
Glova sees executive hires being complemented by new staff boasting support and analytics expertise, such as acquisitions, investments knowledge and creative deal thinking. Kiernan Conway, chief economist for the CCIM Institute, said that property management skills will be in high demand, especially in states that have been more aggressive in opening up, such as Florida, Texas and others across the Southeast. Brokerage, he believes, will be a mixed bag, especially for office.
“We’re still waiting to see what the model will be,” he said. “Office brokers in suburban markets are in the middle of a mad dash to find and lease vintage office parks from the ‘80s and ‘90s. Urban downtowns, not so much.”
The submarkets that have seen explosive growth during the pandemic, including Austin and Miami, and sectors such as industrial and life sciences, are continuing to see high demand for those with extensive experience. Susie Harboth, executive vice president of business operations at Breakthrough Properties, which specializes in life sciences real estate, said firms in strongholds, such as Boston, the Bay Area and San Diego, as well as emerging markets like Los Angeles, New York City and Philadelphia, are ramping up hiring and even looking to hire outside the industry to find those with industry expertise. Robert Coughlin, hired to lead JLL’s Boston life sciences division at the end of 2020, was previously CEO of Massachusetts Biotechnology Council.
The return to more travel and in-person events has also helped accelerate more networking and hiring, Weiss said. Last week, the CDC announced fully vaccinated people are at low risk when traveling, and live industry events are starting to come back; the International Council of Shopping Centers just announced a return to live events in late 2021, including its big December event in Las Vegas.
The events of the next few months, especially around vaccinations and corporate announcements around the return to the office, will determine if the uptick in recruiting turns into a hiring spree. Weiss cautions that offices should step back and think about how they restaff, since the pandemic has provided a rare opportunity to rethink the office, remote work and diversity initiatives.
“My concern with the return to the office is the impact on retention and companies not being thoughtful about how they transition,” she said. “I’ve heard from a lot of candidates recently who know what’s coming and are anxious about what’s coming, and companies who do this well will increase loyalty and retention in the long run.”