NEWPORT BEACH, CA—Companies must step up all offers and opportunities for current employees and potential candidates in order to attract and retain the best talent in the real estate business, RETS Associates executives tell GlobeSt.com. After Louis Dodaro was hired recently as managing director of RETS’ Newport Beach office, we spoke exclusively with Dodaro and principal Kent Elliott about the latest commercial real estate hiring trends and changes.
First, the executives tell us compensation packages continue to increase. We’ve exceeded pre-recession (2006-2007) salaries, and a compelling offer—for top talent only, although B players do experience a trickle-down effect—is 20% to 30% more than what an employee is currently making. This raises the bar and sets a new standard each time someone is hired.
Second, they say the supply for talent continues to diminish. The unemployment rate is negligible, and even in a market as large as Chicago, there is little talent available. Also, second-market companies are attracting talent from first-market companies and are finding themselves having to pay above second‑market rates, but still below first-market rates. And tech and financial services firms have taken all the talent because they’re the attractive industries and company cultures.
Dodaro says the demand for candidates with five to 10 years’ experience has been really robust so far, and this trend is looking to continue into 2016. “Candidates at that level of experience are in high demand. There’s a limited supply of talent with that degree of experience.” Another trend Dodaro notes is candidates on the debt side transitioning over to the equity side in order to be on the side of the owner.
Third, companies need to step up their game. There will be a constant rebidding and competition for talent, and once a candidate gets hired at a premium, it creates a waterfall of people that need to be “bumped up.” For example, when a new asset manager is hired at base salary that is a premium compared to the currently employed asset managers at the firm, the employer must bring up everyone else’s salary so that they can retain talent. Regarding retention, replacement cost of an employee is going to be higher, so the option is to pay for the talent now and bring their salary up to market rate or pay later for new talent and have to spend the time and money searching for a replacement.
Elliott says low unemployment figure of 4.9 percent nationally is working in candidates’ favor, but working against employers. “If you’re unemployed, it makes your job easier because there are not a lot of unemployed people seeking jobs. But to an employer, it’s an unhealthy environment because the pool of unemployed people is so minute.”
Dodaro adds that candidates have been getting multiple offers as they enter the market, not to mention the counteroffers being made by their current employers—all of which ups the ante for all employers.
Those employers who try to hold the line at a certain compensation figure despite what the market is offering, trusting that their brand will retain employees, will lose out, says Elliott. “They won’t be able to hire the quality of person they’d like to hire because they’re below market on compensation. But we’re seeing less of that because people got burned.”
Because candidates are being hired at premium salaries, companies are being choosier with their candidates, questioning employment gaps and short tenure at previous positions. “There is some sympathy for candidates who had gaps during the economic downturn, but it needs to be a good story for why the candidate changed,” says Dodaro. He adds that there has also been an increase in pre-employment testing of candidates on motivation, personality and behavior.
On the job seekers’ part, candidates are looking for perfection, too, says Elliott. “They want to make sure if they’re making a move it’s the right move to where they’re going to be long term.” They might not be willing to make a longer commute, even for higher compensation. “The grass is not always greener, and the known is definitely better than the unknown—there’s risk with the unknown.”