Demand for commercial real estate pros is holding steady despite the wider market decline in property sales — bucking the trend of previous downturns. Typically, as property sales dry up, so too does hiring. That was the case more than a decade ago during the global financial crisis, which yielded mass layoffs and a dramatic decline in search assignments that spanned several years.
But even as property sales remain sluggish in today’s high interest-rate environment, companies that buy, develop and manage real estate-related investments are still tapping search firms to line up new hires.
Recruiters described demand as steady and selective, with assignments focused largely on middle- and senior-level positions. Real estate companies continue to hire pros with specific skills or expertise in popular niche sectors. Recruiters also reported continued demand for asset and property managers, as well as a renewed demand for acquisition pros — typically a green shoot that emerges early in a recovery.
This year, Real Estate Alert tracked 64 search firms active in the sector, the most in the survey’s 15-year history. Much of the hiring today, pros said, is in anticipation of an uptick of activity once interest-rate cuts finally happen. “A lot of our clients are setting their sights on 2025,” said Graham Beatty, president at Ferguson Partners. Real estate firms “are seeing light at the end of the tunnel, but there is still hesitation for the balance of 2024.”
To be sure, search assignments are down significantly from the most recent peak of 2021 through 2022, when firms built out teams at a frenetic pace that matched record sales volume. Demand paused briefly amid the fallout of higher borrowing costs that stalled the investment-sales market, but a wave of layoffs never materialized.
Instead, the pace of assignments remains steady. “Most of what’s happened over the last year has been more thoughtful, and that goes for managing people out and also for who [firms] are bringing in,” said Jennifer Novack, a managing director and co-head of the global real assets practice at global consultancy Sheffield Haworth. It’s partly because the market itself has evolved to be more institutionalized.
Firms instead are taking time to examine their strategies and determine how best to align their staffing. “They have the time now to think about how they are going to shape their business geographically and strategically,” said Lisa Flicker, a senior managing partner and head of real estate at Jackson Lucas.
That has generated more demand for recruiters with advisory and consulting practices, and for those with access to data on compensation and performance, she said. New entrants to the investment class also are driving some of the demand. “A lot of work within real estate right now is coming from outside the sector,” said Gemma Burgess, co-lead of the global real estate practice at Russell Reynolds Associates.
They include private equity funds and others that are flush with capital, free of legacy issues, and see an opportunity to “ramp up significantly and quickly,” she said. Additionally, there continues to be a steady flow of work arising from the continued uptick in retirements that is keeping search firms with succession planning practices particularly busy. “It is a generational sea change right now for both public and private companies,” said Anthony LoPinto, real estate global sector leader at Korn Ferry. His firm currently is managing four chief-executive assignments tied to succession plans, with more on the horizon.
Last year, demand for junior-level staffers dropped off dramatically — ending a highly competitive market for staffers with the least experience and leading to a constant churn that pushed salaries to dizzying heights. “That was the spigot that turned way off,” said Kent Elliott, a principal at RETS Associates. This year, demand has started to return for analyst- and associate-level spots. “The water is back on, and they are being hired, which is definitely a sign of optimism given where we were a year ago.” At RETS, Elliott said assignments for junior-level staffers — positions requiring two to seven years of experience — were up 44% year over year, but still 75% below the 2022 peak.
Meanwhile, real estate firms also are positioning themselves to meet new opportunities in the market. “The bottom line is: [Hiring] is flat, but the areas where there’s hiring are reflective of the changes in the marketplace,” said Steven Littman, president and managing partner of Rhodes Associates. He added that while deals on the equity side are harder due to borrowing costs, more firms have turned to debt-related strategies and are hiring accordingly.
Recruiters, meanwhile, are adapting to the new demand and a series of pending retirements. Within the last 18 months, firms such as Ferguson Partners, Jackson Lucas, Korn Ferry and Russell Reynolds have added new presidents or real estate practice heads. Multiple shops have added offices and bulked up their own staffs, while others have branched off to start new firms.
Case in point: Keller Augusta opened its fourth office in Dallas, where the firm sees growing demand for talent that coincides with increased investor interest in the region. “We recognize the need for more on-the-ground support to meet our clients’ evolving needs, especially as they shift their focus to growing markets like Texas,” said Kate Keller, founder of Keller Augusta. “Our relationships in each of these markets will allow us to support clients as they expand strategies and investment criteria.”
