Everyone's Hiring At Once: Two-Thirds Of CRE Firms Facing Covid-Era Talent Shortage
Roughly 60% to 70% of all commercial real estate firms are facing a talent shortage or talent challenge, according to a leading industry analyst, a hindrance to performance that, in part, comes from long-term issues with attracting and developing the best staff.
CEL & Associates CEO Christopher Lee, whose firm releases a widely read CRE compensation study every year, said that Covid and a shift toward hybrid work have created challenges for the industry. The sudden acceleration of deals this year, after the pandemic slowdown of 2020, also contributed to a booming marketplace where it seems like every firm is hiring at once.
But the current problem finding talent has stemmed in large part from existing issues within the industry, Lee said. Roughly 44% of workers in CRE are over 50, a demographic concentration that creates a bottleneck that stymies youth hiring, mobility, and career advancement (other industries typically are 25% to 30% 50-plus).
Technology has eliminated entry-level jobs like tenant engagement and even research jobs, making it harder for young talent to find an entryway into the industry. The industry has belatedly embraced diversity programs, but still has a long way to go to truly tap into the potential of traditionally overlooked communities, and many potential young workers feel traditional CRE firms don’t have an alignment of values and aren’t demonstrating the kind of community engagement they expect from their long-term employers.
“C-suite executives and HR leaders lack a compelling vision or pitch for potential recruits,” Lee said.
CRE Recruiting founder and principal Allison Weiss said she’s seeing a lot more early career and entry-level opportunities this year than there are candidates to fill them, which has led a large number of companies to increase compensation for new hires. One of Weiss’ clients in Florida, while searching for a senior financial analyst with two-to-three years of experience, had to shift their compensation to “LA/NY levels” and raise starting pay to $90K with bonus potential to attract the right candidate.
“Companies who are ‘posting and praying’ for candidates to apply to their roles aren’t getting the same volume/quality of applicants they were in earlier periods of the pandemic, when there were fewer opportunities,” she said.
“We are absolutely seeing salary increases, which have honestly been a long-time coming,” said Carly Glova, president of Building Careers, a commercial real estate talent firm. “Salaries in CRE have remained generally flat over the past 10 years and in just the past 6 months, they have skyrocketed. We have seen this increase in analyst roles across the board, with asset managers, and construction roles at Project Manager and above. Signing bonuses have been making a comeback, too.”
The problems are even more acute for more tech-centric CRE jobs, said VTS Rise Managing Director Prasan Kale.
After a slow 2020 that provided plenty of time to strategize, many CRE firms entered 2021 with a vision to scale up investment in technology. It has caused an incredible demand for engineering, product and design talent, made all the more competitive because the push toward more remote work means geographical boundaries for talent are disappearing.
“Some companies are definitely raising wages to compete, especially if they are in a lagging part of the CRE industry,” Kale said. “This is the most active talent market we have experienced in 20 years.”
In response to hiring setbacks, companies are offering signing bonuses or first-year bonus guarantees, Lee said, or offering thousands of dollars for advanced training or degrees (exact figures were too varied to offer any specifics or ranges, he added).
“We’ve always had a talent challenge in this industry,” Lee said. “But Covid just exacerbated it tenfold.”
The talent shortage hitting brokers, executives and other CRE office workers is just one of the many labor challenges impacting the industry. In addition to the well-documented and long-standing shortage of construction workers, many employers hiring staff for property management, maintenance, landscaping, cleaning, and other on-the-ground or support positions have felt the crunch.
Apartment Association of Greater Los Angeles Executive Director Daniel Yukelson said landlords and property owners large and small are suffering. Large owners are having extreme difficulties filling maintenance and leasing positions, while small owners have been forced to cut back on these services. Contractors in the industry are struggling to staff appropriately, he said.
National Multifamily Housing Council Vice President of Business Strategies Sarah Yaussi said that her members have been struggling with hiring challenges pre-Covid, but it’s become more acute. Leasing agents and maintenance are especially challenging roles to fill (renovating and repairing apartments contributes to an estimated 340,000 jobs annually, per the NMHC). There’s a degree of burnout, especially among those on the front lines, who are looking for new opportunities.
“We’re not isolated from that broader trend,” Yaussi said. “It’s really tough on female employees who have children, especially with schools still shutting down.”