SelectLeaders/Cornell Annual Assessment of the Commercial Real Estate
Job Market Indicates the Worst Is Yet To Come
The Age of Restructure Will Find Many High-Flying Executives Unemployable, According to the 2008 SelectLeaders/Cornell Job Barometer
The results from the 2008 SelectLeaders/Cornell Job Barometer, compiled by SelectLeaders, an online job board exclusively for the commercial real industry and a company which powers the NAIOP Career Center, in conjunction with Cornell University's Program in Real Estate indicated commercial real estate is not reflecting the depths of the economic malaise, and suggest that the worst is yet to come. The study encompassed three data sources: 5,102 online job postings for professional commercial real estate positions on the industry's eight primary job boards collected in the past six months, 217 Senior Management Surveys, and 72,632 resume submittals to job postings on the SelectLeaders Job Network of twelve real estate websites, which includes the following: BOMA, CCIM, CMBS, CREW Network, NAIOP, NAREIT, NMHC, PREA, SIOR, and ULI, as well as GlobeSt.com, the real estate industry's premier online news site.
Among the notable findings are:
- The global financial crisis has not caught-up with real estate…while hiring trends are down somewhat, commercial real estate is not reflecting the depths of the economic malaise, implying that the worst is yet to come, and we won't hit bottom, until the jobs disappear.
- Middle management jobs have been hit hardest with only minor impact thus far on senior executive level jobs, but, with the deepening financial crisis, will likely to take a toll on the more senior ranks.
- Multi-Family was the one, and only sector that did not decline. In fact, nearly 40% of the total real estate jobs posted was in the Multi-Family sector. In addition, there is an undeniable correlation between the states with the highest numbers of foreclosure filings, and states with the highest numbers of Multi-Family job postings, suggesting the end of the American dream of single family home ownership for many.
- Texas is neck-and-neck with New York trailing by only one percent in commercial real estate job postings, reflecting the underlying strength of the Texas markets being fueled by the oil industry. Florida and Illinois also have been neck-and-neck with job postings for the past two years, reflecting the vigor of Florida's senior citizen economy.
- For opportunity, look for jobs in accounting/controls, property management, and leasing; and down south is the place to be for the most hiring activity.
- The Real Estate's talent gap is deepening as graduate students are already looking elsewhere as investment banking jobs dry up, historically the most attractive alternative for the best and the brightest looking to begin their careers. This will prove to be the singular most significant effect of the current crisis, as it will impact our industry 10 and 20 years from now.
Overall, during the first half of 2008, the commercial real estate job market showed surprising resilience in the face of negative news across all sectors of the economy. Professional, commercial job postings increased steadily on the eight job boards from February through June, only to plummet in July and August from 1085 in June to a mere 591 in August. According to David Funk, Director, of Cornell University Program in Real Estate, "The seasonal effect accounts for some of the decline beginning in July, yet the pace of the decline into August and September points to almost non-existent transaction activity and a shutdown of new development, that is finally showing up in the lack of job postings. In general there is a six to nine month lag between a fall in real estate market activity and resulting job layoffs and hiring freezes. In all likelihood, the worse may yet still be ahead." New York and California have seen their share of commercial real estate job postings decline from 26 percent and 23 percent of the national share to 18 percent and 11 percent, respectively, underscoring the severe job losses in the real estate finance and homebuilding areas that have disproportionately hit these states.
Anthony J. LoPinto, CEO of Equinox Partners, a retained executive search firm focused exclusively on the real estate industry, and founder of SelectLeaders observed, "Market forces are at work that will create, on one hand, the most serious financial crisis and cutback in employment that we have experienced in decades, and new needs and opportunities, on the other hand. Large pools and billions of dollars of commercial real estate loans will be maturing over the next 12 -36 months. There will be a growing demand for seasoned and proven talent that knows how to play the restructure game."
According to Dr. Funk, "The increasing need to squeeze every ounce of performance from commercial portfolios will create demand for asset, portfolio, and property managers with a deep range of real estate experience coupled with sophisticated financial skills." Mr. LoPinto added, "We have already returned to credit based debt products with rigorous underwriting based on conservative real estate fundamentals, low-loan-to-value structures, and the "R" word, recourse. This will necessitate a different breed of lender with deep real estate knowledge and credit skills. Unless they can retool, many of the professionals who grew-up in the high-flying debt capital markets era of the 90's will not find a home in the age of restructure, lacking the skill set in demand today."
The complete 2008 Job Barometer report is available online.
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