With U.S. unemployment rates at record highs due to the pandemic’s unprecedented impact on all types of businesses, it might seem that recruitment firms have also hit the pause button. And while this might be true for the hospitality and retail sectors, industrial and multifamily have been at the other end of the spectrum. In the multifamily industry, competition for top talent has not stopped and the pendulum has been swinging in favor of both the candidates and the employers.
Principal Kent Elliott and Director Erika Daniel of RETS Associates noticed the current employment environment has motivated candidates to be more open to new job opportunities, with competition unchanged for some very specialized positions. In the interview below, Elliott and Daniel shared some tips, tricks and traps that recruitment managers and executives must be aware of throughout the hiring process.
Considering the high unemployment rate, what can you tell us about competition for top talent in the multifamily industry?
Elliott: It’s important to note that there is a real disparity between the overall unemployment rate and the commercial real estate industry unemployment rate. The CRE unemployment rate is much lower than the overall unemployment rate and this holds true even during the COVID-19 crisis.
While a year ago the overall unemployment rate was about 4 percent, CRE unemployment was between 2 and -2 percent. Currently, overall unemployment has spiked to around 13 percent and the CRE unemployment rate stands at roughly 4 percent. That figure is the same as what the broadest sector of the economy stood at when it was healthy. With 96 percent of CRE workers employed, they must be presented with a truly attractive opportunity in order to make a change.
That said, the slightly increased 4 percent unemployment rate for CRE actually helps the employer by decreasing the competition. There are far more good candidates unemployed now than there were a year ago. This means these candidates don’t have the leverage they had a year ago with regard to salary and benefits packages.
Daniel: The current employment environment also means that candidates are more open to discussing a job change. For example, RETS is currently conducting a search in which the primary candidate had been unwilling to change career paths three months ago. Since then, the candidate’s current company was purchased, and he is now more open to looking at opportunities in the market.
Would you say multifamily nowadays is a candidate- or an employer-driven market?
Elliott: The CRE job market is a bit like a windshield wiper. For the last 10 years, it has stayed on the right-hand side of the car in the candidate’s market. Since COVID-19 struck, the wiper shifted quickly to the center, with either the employer or candidate having the upper hand, depending on the situation. A few months ago, candidates could have been more demanding in their salaries and signing packages, and companies would have acquiesced.
Daniel: Today, many people are nervous, even those who still have a job. For example, three top multifamily candidates that were not open to a change before the pandemic have recently reached out to RETS to test the market. With more candidates looking around, employers feel they are back in the driver’s seat, but they need to be careful not to overplay their position, as candidates can be skittish.
That said, multifamily is unique in that not all positions have transitioned to an employer’s market. Multifamily property management, in particular, has remained a candidates’ market. In fact, property managers have been busier than normal due to COVID-19. They have been pulled in many different directions, handling issues such as disinfecting, following social distancing protocols at properties and sourcing vendors who are willing to come to a property during the pandemic. Managers are also working with residents who may be having trouble paying their rent, due to loss of income.
Because of these new requirements, the virus has actually increased the need to hire top multifamily property management talent, moving the pendulum back to a candidates’ market in this sector. There are also certain niche positions in the multifamily industry where only a certain number of viable candidates exist. Competition remains unchanged for those very specialized positions.
What multifamily real estate roles are companies still trying to fill today?
Elliott: There is a louder call for candidates to fill positions in business development, client services, asset management and financial analysis right now. There is currently less activity on the development front. One of the reasons for the decrease in development job activity is that construction projects have a long lifespan. While projects that were started before the pandemic are continuing, new development deals may be delayed or put on hold, which will impact hiring later in the year.
What can you tell us about hiring for senior-level, high-paying positions in this new economic context?
Elliott: There is a trend toward controlling costs by waiting on senior-level hires if the position can wait. Many companies are evaluating whether they can hold off on hiring for certain high-level positions until the economy is on surer footing. For example, one of RETS’ New York-based clients recently purchased assets in Los Angeles and had been considering hiring a Southern California-based asset manager. While the firm is still going to hire someone, they are delaying the offer until at least the fourth quarter of the year. This doesn’t mean companies haven’t been actively pursuing candidates they intend to hire.
Employers have been connecting with candidates and conducting virtual interviews until in-person meetings can resume safely. Firms are eager to fill high-level positions in order to have strong leadership in place in the competitive environment that lies ahead. In fact, RETS is currently searching for a vice president of client services for the multifamily property arm of a national client who is bullish on business development coming out of the pandemic. We expect to see more of these search requests as time goes on.
What advice do you have for managers and executives in terms of adding new staff in these difficult times and beyond.
Elliott: First, today’s hiring executives must be proactive. Many employers think it’s better to hold off hiring right now because there will be a slew of candidates out in the marketplace in three or four months that will accept offers for less than what they were making before the pandemic. This is a mistake.
Employers may be able to acquire some candidates for a lower salary, but this strategy can be a risk to long-term tenure and profitability. Candidates that accept lower positions and packages often continue searching for something more aligned with past positions, making their tenure short and often leading to a need to refill the position quickly. Instead, RETS recommends proactively exploring and engaging with the candidate pool now, while top talent is considering their next move and meeting in the middle with an offer or package that will support long-term growth on both sides.
Second, employers who discover a star candidate would be wise to move quickly in the current market. Competitors know more people are looking for jobs now than they were a few months ago and the proverbial vultures will be circling. Companies need to sign, seal and deliver the candidate they want faster than normal, or they will lose the hire.
Third, companies must communicate on a regular basis with their candidates and recruiting firms. By keeping communication open and frequent, hiring managers can best understand this new landscape and how to navigate it effectively to score the best talent possible.
What negotiating strategies can managers employ to persuade candidates?
Daniel: Today’s employers need to present compelling reasons for a candidate to accept a job offer in the absence of a face-to-face meeting. Since candidates won’t be able to visit the office to get a true feel for the physical environment, interviewers must get creative about “showing” them where they would be working. Sending prospects a short virtual tour that highlights office elements and amenities is an excellent way to stand out from other hiring companies.
Employers must also make an effort to convey the company’s brand and culture, even in initial video calls. One way to accomplish this is to share video or written testimonials from team members about why they enjoy working for the company. Also, personal touches continue to make all the difference in CRE hiring. RETS advises hiring managers to take the time for a personal touch, especially for top talent. This can be anything from a written thank-you note or a small gift/token of appreciation, to arranging a personal follow-up call with the candidate and a company executive to set the hiring company apart from its competitors.
What would you advise multifamily companies to look for in each candidate?
Elliott: Most importantly, multifamily companies looking to hire should seek out candidates that exhibit flexibility and resilience. We are all getting used to the new normal and team members must be able to adapt to unprecedented situations gracefully. Technology skills and expertise are also essential. The industry is increasingly adopting digital processes and the ability to utilize this technology and quickly become facile with new software will be essential going forward.
Candidates who react well to high-pressure situations are also preferable. Multifamily property managers must be able to pivot quickly and handle many new situations, particularly given the new rules about eviction during COVID-19. For example, managers may have to allow residents who have lost their job during the pandemic to break their lease if that resident can find another affordable place to live. Interestingly, the demand for apartments has not abated during the pandemic. Therefore, filling vacancies with gainfully employed renters shouldn’t be difficult.
Is remote work in the multifamily industry sustainable in the long run?
Daniel: Remote work is sustainable in the multifamily industry in the long run for some job descriptions. On the property management side, many senior-level candidates have discovered that they can do a lot more of their job from home than they realized. This is not the case for all positions, though. Multifamily owners need site-level property managers to be physically at a property to oversee and manage what is happening there. Construction and development jobs also cannot be accomplished remotely.
Whether or not remote work is sustainable in this sector long term really depends on the job requirements and how site-specific the work is. We will likely see CRE employers continue to navigate and find ways to offer remote work where possible.
When do you expect hiring in other real estate sectors, such as retail or hospitality, to pick up as well?
Daniel: Some real estate sectors, such as multifamily and industrial, have exhibited strength for many years. Others, such as retail and hospitality, were already struggling to some degree going into COVID-19 and still have many challenges ahead of them. These two sectors have been hit hardest economically by COVID-19 and it will take them longer to recover. That said, the real estate industry has a long history of reinventing itself. While a full recovery may not happen for a few years in the retail and hospitality arenas, it will happen. When it does, these sectors will likely be stronger than ever.