NEWPORT BEACH, CA—CRE firms are searching for top talent for longer as senior-level executives retire faster than younger execs become seasoned enough to fill their shoes, RETS Associates principal Kent Elliott tells GlobeSt.com. Elliott and RETS principal Jana Turner tell us a lot of commercial real estate executives are less afraid of the next downturn than they are of the lack of available senior management because, although the number of Millennials is greater than the number of Baby Boomers, the Boomers are retiring, and there is no one to fill in the void; Millennials don’t have enough experience. Turner says, “CRE firms do not recruit enough from colleges or other applicable industries like hospitality, and they’re missing out on great talent because of it.” We spoke exclusively with Elliott about this situation and what can be done about it.
GlobeSt.com: Why is the lack of senior management in real estate a concern?
Elliott: There is extremely limited talent to move up and fill senior- and executive-level positions as Baby Boomers begin to retire. The natural progression would be to promote a Gen-Xer, currently in middle management, to fill the void. However, the pool of available Gen-Xers in the CRE industry is much smaller than that of exiting Boomers.
There are three major trends that have combined to create this lack of talent. First, in the early to mid-1990s, many people coming out of college (the Gen-Xers) went into the tech industry because of the dot-com boom. Real estate wasn’t in vogue, and therefore not many people went into the field. Second, moving into the 2000s, there was another tech boom that was extremely attractive to early Millennials graduating college. Flash forward to today, and we look at those Gen-Xers and older Millennials in middle-management positions to replace Boomers. However, they never came into the real estate industry.
In addition to the talent never entering the industry, the recent recession caused a significant amount of talent to leave the industry because of a lack of available jobs or compensation. These three factors have caused a “double-generational” impact that is leaving a number of CRE firms searching for top talent for longer than they had in the past. This lack of talent is concerning the future development cycles because there will be fewer people leading the activity.
GlobeSt.com: Do you think colleges are doing enough to set Millennials up for success in the industry?
Elliott: Colleges need to better expose students to the commercial industry and show them what the opportunities are within each role. This may be offering opportunities to solve hypothetical situations, listening to guest speakers, etc. In addition, colleges can better prepare Millennials for success in the industry by doing the following: giving them projects that require real practical skills that would be applied in a CRE firm, creating opportunities to refine and perfect negotiation skills, building up their customer-service skills and offering real estate courses where students can earn their license at the end of the class.
GlobeSt.com: What are some untapped areas for recruiting talent that CRE firms are missing today?
Elliott: There are a few examples of other industries where employees may be more apt to cross over into CRE. Service industries such as hospitality are a great one from which to recruit talent for property-management positions. Both roles are highly focused on customer service and would translate smoothly. Additionally, there are real estate professionals in the healthcare industry that manage assets, acquisitions and expansion. These people have the fundamental skills that developers and other owner/operators want for their operations.
GlobeSt.com: What else should our readers know about the gap between Millennials and Baby Boomers in CRE?
Elliott: There are two primary areas that CRE companies must consider to bridge the gap. First, if companies are going to make do with fewer qualified team members, they must be trained to work as efficiently as possible to make gains in productivity. Secondly, employers need to be able to lock in top performers for a longer period of time (e.g., offering equity deals for an extended period). Losing strong talent hurts more than it ever has in the past.