There is a continued conversation about the war for talent in the CRE industry, but what does this really mean as it relates to the current real estate cycle?
In this edition of The Hiring Squad, Kent Elliott, principal at RETS Associates, a leading national CRE recruiting firm, reveals statistics about one job sector in CRE that signifies where we are in the cycle. Elliott then explores the impact that the war for talent has on other positions and compensation packages nationwide.
Hiring for acquisitions pros has slowed to a crawl, signifying a mature cycle
This is one of the top identifiers of where we are in a cycle, because it’s one of the first positions to fill heading into a bull market. Searches for acquisitions pros began slowing in 2013, relative to asset managers, financial analysts and development pros.
- In the last three years, RETS experienced a 43% decrease in searches for acquisitions pros nationwide.
- The demand fell drastically by 70% at the end of 2016, compared to the year prior.
Although acquisitions is the only job sector with a decline, it demonstrates that CRE is in a mature spot in the cycle. Similarly, the pool of high-quality, unemployed acquisitions pros is not very deep, If they’re employed, they’re doing well in this market.
Where is the real impact of this hiring war?
Searches for investment experts and other asset managers who can add value to a portfolio increased 33 percent since 2013. With national unemployment below 5 percent, the unemployment rate in the CRE industry in primary markets is trending between 1.5 and 2 percent.
RETS continues to search for a large number of positions nationwide.
- Searches for asset managers steadily increased 33% since 2013 nationwide.
- Searches for development pros have also increased by 200% over the last three years.
According to RETS, a continued increase in demand has caused a 20%-40% increase in base salaries for mid-to-senior level CRE pros nationwide, with a supplemental equal to, or greater than an increase in incentive compensation.
- In one example, RETS is working to place an asset manager in the Bay Area with a $200,000 base salary and a $200,000 incentive bonus. This is a drastic increase compared to a similar search in 2013, which offered a $160,000 base salary and a $75,000 incentive bonus.
- Some companies are going beyond base salaries and cash bonuses to offer stock, a portion of carried interest or percentage of ownership as supplemental incentives.
As we enter into the mature end of the cycle, these creative incentive offerings become another arrow in the quiver to attract top talent.