In a tight labor market, what do top candidates for CRE positions look for?
Today’s commercial real estate companies are in a race for talent.
With employment levels at 50-year lows and business pipelines filled, commercial real estate companies of all sizes are working to expand in order to meet the demands of today’s healthy economy.
This trend is reflected in the increasingly higher wages being commanded in today’s commercial real estate industry.
Total compensation in commercial real estate increased by 15.7 percent between 2013 and 2018, and senior executive compensation in the field is rising at an even higher rate—some report between 20 percent and 35 percent in the last five years. According to salary.com, the average top commercial real estate executive salary in the U.S. is $291,479 as of July 30, 2019, and total cash compensation, including base and annual incentives, averages $438,403.
Along with rising salaries, commercial real estate firms are increasingly investing in recruiting and retention efforts. Here are some of the emerging trends we’re tracking:
Growing Compensation and Benefits
Compensation in commercial real estate is moving beyond salary to include creative benefits that resonate with candidates.
Some of the benefits companies are adding to their offer packages include equity components such as stock, options, an ownership percentage in investment deals, and long-term incentive plans (LTIP). Other benefits that serve as motivators for today’s candidates include enhanced vacation packages, flexible hours, and remote work options.
Benefits like these hold considerable value for employees and candidates. When combined with other positive aspects of a position, these benefits can mean as much as—if not more than—cash compensation and can persuade candidates to accept positions with companies that offer them.
Evolving Physical Workspace
Like many categories of office users, commercial real estate firms are investing more capital in their physical office space to attract and retain top talent.
Open, collaborative space, sit/stand and active desks, leading-edge technology, and common amenities like on-site gyms, outdoor work spaces, concierges, and provided snacks or meals are some of the areas where these firms are investing money.
Modern work spaces make a real difference for today’s candidates. For example, we recently worked to find a candidate to fill a very senior role on behalf of a client with an “old school” non-updated office. Of three qualified candidates we found, each declined, indicating that the client’s office environment represented the company’s potential “non-creative” approach to deals and business in general.
Changing Role of Company Websites
The role of the company website has changed. Where once this external marketing tool was simply a place to showcase company services, today there is an increasing trend of investing in showcasing the cultural and business environment of the firm to attract employees.
Today’s commercial real estate companies are embracing this trend by giving their Careers pages, portals, and communications prominent placement, and investing time to create content that touts the advantages of working at the company as well as the rewards and resources available to employees. Websites are now an integral part of selling the company dream alongside the roles these firms seek to fill.
Expanding Social Media Investments
Everyone knows social media is powerful. Today’s commercial real estate companies are harnessing that power by increasing their investments in candidate-focused platforms such as LinkedIn, Twitter, and Facebook.
Career-oriented platforms, like LinkedIn in particular, are focused on facilitating strong matches between candidates and firms seeking to fill positions. As a result, commercial real estate firms are willing to pay what is needed to get their job postings in front of the right candidates.
Firms will also pay extra for prominent placement on social media platforms to ensure that qualified candidates will see their postings, and they are taking advantage of digital algorithms to gain the greatest exposure for their positions.
Social media has become one of commercial real estate firms’ most indispensable tools in the process of recruiting top talent, and its importance will continue to grow as the technology advances.
Fortifying Internal and External Recruitment Processes
Today’s commercial real estate firms are growing their investments in both internal and external recruiting resources. This comprises expanding internal HR teams to handle recruiting and on-boarding, as well as developing new relationships with external recruiters for positions that are unique and/or difficult to fill.
Filling commercial real estate roles has become increasingly difficult due to the shallow talent pool. While the national unemployment rate in July was at 3.7 percent, the commercial real estate industry boasts an almost negative unemployment rate. As a result, commercial real estate firms have been challenged to find top talent to hire and to entice these candidates to accept positions at their firms.
To meet this challenge, large firms in particular are beefing up their internal recruitment teams. In addition, firms that hadn’t used recruiters before are increasingly hiring external recruiters to locate and bring in these candidates.
Deepening Ties with Real Estate Organizations
Commercial real estate firms are deepening their investment in industry groups and organizations that cater to young talent, such as NAIOP’s Young Professionals Group and ULI’s mentoring program.
Membership and increased participation in these organizations allows firms to get to know the rising stars (and vice versa), aiding in recruitment efforts.
Becoming mentors for young executives through these programs allows companies to deepen their relationships with up-and-coming talent, which could lead to that candidate accepting a position at the firm.
Expanding Partnerships with College Programs
Commercial real estate firms are increasingly investing in programs that allow them to meet and connect with college students before they graduate.
This strategy exposes firms to the strongest students emerging from colleges throughout the country in an effort to entice them to join their firm upon graduation.
Private equity firms in particular are stepping up their recruitment programs with specific schools that are “real-estate centric” in different regions of the U.S., including the University of Southern California in the West, the University of Pennsylvania in the Northeast, and the University of Wisconsin-Madison in the Midwest.
By investing in these programs at key colleges and universities, these companies gain access to some of the most promising young talent in the country in advance of their competitors, giving them a decisive edge in recruitment.
Top Level Engagement in the Recruiting Efforts
An emerging trend in this recruiting space is executive-level involvement in the recruiting process. At RETS, we advise our clients to take an active role in the recruitment process, including hosting and attending a social event for the key candidates, personally presenting the offer, and any other actions that personalize the recruitment process. For example, we recently presented a candidate for a senior role to a client in Texas that was seeking to grow its presence in Southern California. The hiring manager invited our candidate to dinner at his home and, to the candidate’s surprise, one of the firm’s founders joined the dinner. This was a big influencing factor for the candidate in accepting the position.
As the focus on recruitment and retention increases, commercial real estate firms will continue to invest more in all of these areas.
Industry dynamics will also ensure ongoing investment in these areas. Despite talk of an impending bear market as the market cycle matures, the outlook for commercial real estate remains bright. Because the industry is so strong, many companies are able to offer top candidates the compensation packages, benefits, and amenities that encourage them to remain at their current positions.
Commercial real estate firms that step up their recruitment and retention investment now will be able to best distinguish themselves and reach their hiring and retention goals in the years ahead.